Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $257,000 but expects the standard deviation in net daily cash flows to be $13,200, the effective annual rate on marketable securities to be 4.5 percent per year, and the trading cost per sale or purchase of marketable securities to be $33.50 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) Optimal cash return point

Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $257,000 but expects the standard deviation in net daily cash flows to be $13,200, the effective annual rate on marketable securities to be 4.5 percent per year, and the trading cost per sale or purchase of marketable securities to be $33.50 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) Optimal cash return point

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Imagineering, Inc., is considering an investment in CAD-CAM compatible design software with the cash flow profile shown in the table below. Imagineering’s MARR is 18 %/year.What is the present worth of this investment (in millions)? $enter a dollar amount Carry all interim calculations to 2 decimal places and round your answer to the nearest million. The tolerance is ±0.05. EOY 0 1 2 3 4 5 6 7 Cash Flows (M$) $12 $1 $5 $2 $5 $5 $2 $5
WOPPERS PLC, which currently has negligible cash holdings, expects to have to make a series of cash payments totalling $3 000 000 over the forthcoming year. These will become due at a steady rate and can be met by making periodic sales from existing holdings of short-term securities. According to the company’s financial advisors, the most likely average percentage rate of return on these securities is 9% over the forthcoming year, although this estimate is highly uncertain. Whenever the company sells securities, it incurs a transaction fee (T) of $50. Calculate the optimal cash balance for the company What is the optimal number of times Welders should sell securities? . Determine the cost of holding cash resulting from this policy.
HJK Corporation's demand for cash during a year's time is $500,000. Each time HJK sells securities to raise cash, it pays a brokerage commission of $10. The interest rate HJK earns on the securities is 4% per year 9 How much in securities should HJK sell I each time it sells securities to minimize its costs of holding the cash instead of the securities and to minimize its brokerage commissions? *
Webster runs a $100,000 per month cash deficit,requiring periodic transfers from its portfolio ofmarketable securities. Broker fees are $32 pertransaction, and Webster earns 7% on its investment portfolio. How can Andria use the EOQmodel to determine how Webster should liquidatepart of its portfolio to provide cash?
Heath and Logan Inc. forecasts the free cash flows (in millions) shown below. The weighted average cost of capital is 13%, and the FCFs are expected to continue growing at a 5% rate after Year 3. Assuming that the ROIC is expected to remain constant in Year 3 and beyond, what is the Year 0 value of operations, in millions? Year: 1 2 3 Free cash flow: ($20) $15 $45 (Round your answer to 2 decimal places.)
The variance of the daily net cash flows for Bumbl Co. is $1.44M. The opportunity for the firm of holding cash is 8% percent per annum or equivalent to 0.0211% per day. The fixed cost of buying and selling securities is $600 per transaction. The management determined that cash should not fall below $20,000. Given these information, determine the following: a. Cash return point. b. Upper Limit c. Assuming that on a particular period, Black pearl’s cash balance is $150,000, how much of this amount is to be invested?
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Veggie Burgers, Inc. would like to maintain its cash account at a minimum level of $247,000 but expects the standard deviation in net daily cash flows to be $12,200, the effective annual rate on marketable securities to be 4.9 percent per year, and the trading cost per sale or purchase of marketable securities to be $28.50 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places.) Optimal cash return point
The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next five years: Year 1 $250,000 Annual Cash Flows Year 2 $20,000 Year 3 Year 4 $180,000 $450,000 Year 5 $550,000 The CFO of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar?
The Purple Lion Beverage Company expects the following cash flows from its manufacturing plant in Palau over the next four years: Annual Cash Flows Year 1 Year 2 Year 3 Year 4 $100,000 $20,000 $330,000 $450,000 The Cro of the company believes that an appropriate annual interest rate on this investment is 4%. What is the present value of this uneven cash flow stream, rounded to the nearest whole dollar? O $1,650,000 O 2,000,000 O $792,676 O $450,000
If average daily remittances are $1 million, and extended disbursement float adds 12 days to the disbursement schedule, how much should the firm be willing to pay for a cash management system if the firm earns 15% on excess funds?
Current and projected free cash flows for Radell Global Operations are shown below (in $ millions): Growth is expected to be constant after 2021, and the weighted average cost of capital is 10.7%. What is the horizon (continuing) value at 2022 if growth from 2021 remains constant? Do not round intermediate calculations. Enter your answer in millions, WITHOUT comma or separator. For example, an answer of $1 million should be entered as 1, not 1,000,000. Round your answer to the nearest whole number.

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