Number of times per quarter that domino should sell bills

Assignment Help Financial Management

Reference no: EM131867756

As the financial manager of Domino Corp., you want to determine how frequently the company should sell the Treasury bills it owns to cover its day-to-day cash flow needs averaging $15 million a quarter. The annual rate of return on the Treasury bills is 0.4% and it costs $300 each time the company sells bills. Assume that the funds received from selling the bills do not earn any interest.

a) What is the optimum number of times per quarter that Domino should sell the bills? Use the EOQ formula.

b) Suppose that Domino could invest its temporary excess cash balances at 0.2%. What is the optimum number of times per quarter that Domino should sell the bills?

Reference no: EM131867756

Questions Cloud

Overall cost of debt is the weighted average : Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues.

Calculate the appropriate price at which this investor : Calculate the appropriate price at which this investor can contract to buy the asset in one year.

Calculate net daily advantage of the system : If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. Is it worthwhile to adopt the system?

Three year remodeling and expansion project : Home Place? Hotels, Inc., is entering into a? 3-year remodeling and expansion project.

Number of times per quarter that domino should sell bills : What is the optimum number of times per quarter that Domino should sell the bills? Use the EOQ formula.

Does this change her initial decision : Suppose Alejandra can only arrange financing at 7.50% instead of 3.20%. The cash rebate remains at $2,000. Does this change her initial decision?

What is the amount of property tax revenues for the year : What is the amount of "Property Tax Revenues" for the year? What is the amount of total "Revenues" for the year?

Emperical evidence on the trends of earnings and dividends : Emperical evidence on the trends of earnings and dividends shows that:

Firm is planning to acquire firm : Firm A is planning to acquire Firm B. If Firm A prefers to make cash offer for the merger it indicates that:

User Account

All Pages