Discuss the sensitivity of the model to changes in the value

Assignment Help Financial Accounting
Reference no: EM132609053

PRS Corporation uses one of the cash conversion models to manage its cash account. Recently, someone asking how sensitive is the solution for the return point and upper limit to changes in the conversion cost, the variance of daily net cash flow and the daily opportunity cost rate. The values that are currently being used are $50 conversion cost, $2 million daily net cashflow variance and 10% annual opportunity cost.

Question i) Compute the return point using current values.

Question ii) Compute the upper limit using current values

Question iii) Simultaneously increase each of the three (3) variables values used by 50% and recalculate the return point and upper limit.

Question iv) Discuss the sensitivity of the model to changes in the value of the input variables.

Reference no: EM132609053

Questions Cloud

Improve a bad situation with a teammate : Give an example of how you can improve a bad situation with a teammate
Review the reports of your performance : Review the reports of your performance in the first 4 regular rounds of the simulation. Your group will prepare a group report of not more than 5 pages
Discuss the importance of determining a firm cost of capital : Discuss the importance of determining a firm cost of capital? Moneague Wholesale Ltd. Income Statement for the year ended Dec. 31, 2019
Define symptoms of a business problem : Define symptoms of a business problem. Give an example as to how it applies to the banking and education industries.
Discuss the sensitivity of the model to changes in the value : Discuss the sensitivity of the model to changes in the value of the input variables. PRS Corporation uses one of the cash conversion models to manage
Solve balance in the deferred tax asset or liability account : Solve the balance in the deferred tax asset or liability account as at December 31, 2019. Since Devon Ltd. began operations on Jan.1, 2019
Find what is the plan asset fair value at dec : What is the Plan asset fair value at Dec 31 2019 and Dec 31 2020 ? What is the projected defined benefit obligation (DBO) at Dec 31, 2019 and Dec 31, 2020?
Analysis to evaluate risks of the portfolio : Assume you are the project lead for the analysis team that uses Efficient Frontier Analysis to evaluate risks of the portfolio.
Explain three assumptions of capital assets pricing model : Explain three (3) assumptions of the Capital Assets Pricing Model (CAPM) and how will the relaxation of these assumptions affect the Capital Assets Pricing

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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