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A company’s cash balance varies randomly from day to day. It costs the company $30.00 per transaction to move funds from the cash account (which is non-interest bearing) to an account that earns interest or to move funds from the interest bearing account to the cash account. Its average return on interest bearing securities is 1.65%. The company wants to maintain a minimum cash balance of $40000. The variance of the company’s daily cash balance is 241,025,000. 1. When the company’s cash balance reaches $40000, how much money should be added to the cash account by selling interest bearing investments? 2a. At what cash account balance (upper limit) will funds from the cash account be used to purchase interest bearing investments? b. What dollar amount of interest bearing investments will be purchased when the cash account balance reaches the amount indicated in part a. 3a. How would the results (answer to questions 1 and 2a and b) change if the variance of daily cash balance were to increase by 30%? b. How would the results (answer to questions 1 and 2a and b) change if the interest rate were to increase to 2.00%? c. How would the results (answer to questions 1 and 2a and b) change if the costs to convert to or from cash were to increase to $35?
How could Dell mitigate the risk caused by this receivable by borrowing or lending money.
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Crow, Inc., a not-for-profit company, has a product contribution margin of $40. The fixed costs are $800,000. Crow, Inc., has set a target profit of $35,000 per year. A. What is the breakeven point in units? B. How many units must be sold to achieve ..
Proposal would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average ..
Bet'R Bilt Bikes just announced that their annual dividend for this coming year will be $1.42 a share and that all future dividends are expected to increase by 2.5% annually. What is the market rate of return if this stock is currently selling for $1..
If the future spot rate of the Canadian dollar is $0.85, what is Andrea's profit or loss per unit?
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Suppose that a few months ago you purchased a given number of shares of a mutual fund at the fund’s Net Asset Value (NAV) which,
The assets of Dallas & Associates consist entirely of current assets and net plant and equipment. The firm has total assets of $2.6 million and net plant and equipment equals $2.1 million. It has notes payable of $140,000, long-term debt of $745,000,..
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Ten years ago T-Bone Company purchased a drill for $250,000. It was being depreciated on a straight line basis to an estimated $25,000 salvage value over a 15 year period. The firm is considering selling the old drill and purchasing a new one that wo..
Discuss the difference in value (if any) of these two stations
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