Determine optimal size of the company transfer of funds

Assignment Help Accounting Basics
Reference no: EM133018315

Question - Maendeleo Company anticipates Sh.150 million in cash outlays during the next year. The outlays are expected to occur equally throughout the year. The company's treasurer reports that the firm can invest in marketable securities yielding 8% and the cost of shifting funds from marketable securities portfolio to cash is Sh.7, 500 per transaction. Assume the company will meet its cash demands by selling marketable securities.

Required -

1. Determine optimal size of the company's transfer of funds from marketable securities to cash using the Baumol Model?

2. What will be the company's average cash balance assuming you use the Baumol model?

Reference no: EM133018315

Questions Cloud

Compute the amount of recognized gain Marvin must report : On January 2, 2020, Marvin Drake sold a capital asset for $145,000. Compute the amount of recognized gain Marvin must report on his tax return for 2020
How much must you deposit today in an account : If you wish to accumulate $249,000 in 12 years, how much must you deposit today in an account that pays a quoted annual interest rate of 14%
What is the quoted annual yield-to-call for these bonds : The bonds are currently selling for $933. The bonds may be called in 5 years for 114.0% of par. What is the quoted annual yield-to-call for these bonds
Calculate the amount of net income available for the company : Calculate the amount of net income available for the company to pay dividends to current shareholders if it maintains a capital structure of 46% in debt funding
Determine optimal size of the company transfer of funds : Maendeleo Company anticipates Sh.150 million in cash outlays during the next year. Determine optimal size of the company transfer of funds
Prepare the journal entries to record change in fair values : Prepare the journal entries to record: The change in fair values for the biological assets between ends of the two reporting periods
What is the price earnings ratio of the company : What is the price earnings ratio (PE) of the company, given total number of outstanding ordinary shares is 57,000 and market price of each share is $22
Calculate the rate of return would you get from investment : In phase 2, assume the payment of income is changed to 74,000 per year forever. Calculate the rate of return would you get from the investment
What annual rate of interest must be obtained : If a student wishes to accumulate $450 after two years and he/she makes an initial deposit of $300, what annual rate of interest must be obtained

Reviews

Write a Review

Accounting Basics Questions & Answers

  Discuss how coffee should account for its investment

Discuss how coffee should account for its investment in Cream and how the information would appear in Coffee's balance sheet, income statement

  What were total expenditures for the debt service fund

A Debt Service Fund is created to pay $1,000,000, 10-year, 5% bonds which were issued on April 1, 2015. What were total EXPENDITURES for the Debt Service Fund

  What is dozier terminal or horizon value

Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years.

  What amount should sandhill report

At December 31, 2017, Sandhill Inc. had a deferred tax asset of $33,000. What amount should Sandhill report as total 2018 income tax expense

  Determine jamison cash flow from operations

Jamison Company Income Statement as of 12/31/X6 - Revenue 76450, Determine Jamison's cash flow from operations using indirect methods

  You have been hired by the management of alden inc to

you have been hired by the management of alden inc. to review its control procedures for the purchase receipt storage

  Evaluate angela peters attorneys first month of operations

angela peters practiced law with a partnership for 10 years. recently she opened her own law office which she operates

  Compute the predetermined overhead rate

Compute the predetermined overhead rate under the current method, and determine the unit product cost of each product for the current year

  Show support for the bond payable discount by preparing

On June 1, 2002, a company purchased on the open market $20,000 of a company's non-convertible (or convertible) bonds (2% of $1,000,000 bonds outstanding) at a price of "60" ($12,000 cash) plus accrued interest.

  State the correct consolidation worksheet adjusting entry

Ben Ltd declared a $3,500 dividend. State the correct consolidation worksheet adjusting entry for preparation of the consolidated financial statements

  How much net pension liability should Nassau report

Nassau county currently set aside $75 million in pension trust fund. How much net pension liability Nassau report in its government wide financial statement

  What sales price would have to be charged

What sales price would have to be charged to earn a $90,000 target profit assuming the investment in technology is made?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd