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The treasury department of ABC limited has asked you to help determine the target cash balance based on the following data. You have been informed that the company meets its cash requirements through and sell of marketable securities. Every time it engages in buying or selling, it incurs sh. 2, 500. In a given period, based on past experience, the standard deviation of daily cash usage is sh.1.5 Million. On average, return on treasury bills is estimated at 8 percent per annum. At any given time, cash reserves should not fall below Sh. 500,000, the minimum cash balance.
(i) Briefly discuss two models used for determining target cash balance
(ii) Compute the target ash balance for ABC Limited
(iii) Compute the average Cash Balance
(iv) Determine an estimate of the amount to be invested in treasury bills at any given time
Will A recognize any gain when A lends out the shares? Why or why not? Will C recognize any gain when C lends out the shares? Why or why not?
Suppose you borrow $75000 when financing a coffee shop which is valued at $99000. Assume that the unlevered cost of capital for the coffee shop is 7.5% and that the cost of debt is valued at 5%. What should be the cost of equity of your firm?
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decides to run a series of run of press (ROP) advertisements.
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Based on what we learned in Chapter 4, draw the timeline, and explain/discuss how you would calculate the present value of a financial instrument to promises to pay $500 annually (at the end of each year) for the next 5 years plus $2,500 at the end o..
Stock dividends: The market value balance sheet for Outland Manufacturing is shown in the table below. Outland has declared a 20 percent stock dividend. The stock goes ex-dividend tomorrow. (Chronology for a stock dividend is similar to that for a ca..
outline of your project report and to begin revisions as soon as you receive feedback from your instructor. the outline
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