What will be walnuts average cash balance

Reference no: EM131916066

Problem

1. Walnut Industries projects that annual cash usage of $3.75 million will occur uniformly throughout the forthcoming year. Walnut plans to meet these demands for cash by periodically selling marketable securities from its portfolio. The firm's marketable securities are invested to earn 5.2 percent, and the cost per transaction of converting funds to cash is $40.

A. Use the inventory model to determine the optimal transaction size for transfers from marketable securities to cash.

B. What will be Walnut's average cash balance?

C. How many transfers per year will be required?

Reference no: EM131916066

Questions Cloud

Determine the value at cetain rate per year : What is the value today of $4,100 per year, at a discount rate of 9 percent, if the first payment is received 5 years from today.

Briefly assess the equity of informal credit markets : Briefly assess the efficiency and equity of informal credit markets in light of your explanations.

Evaluate the relaxation in credit standards : Futon Company has been reviewing its credit policies. Evaluate the relaxation in credit standards that Futon is considering.

Explain the role of the financial manager in developing : At the first class meeting, six main principles of finance were discussed, which were underscored numerous times since the beginning.

What will be walnuts average cash balance : Use the inventory model to determine the optimal transaction size for transfers from marketable securities to cash. What will be Walnut's average cash balance?

What is annual interest rate that brown company should pay : Brown Company is short on cash and is attempting. What is the maximum annual interest rate that Brown Company should pay on borrowed funds? Why?

What areas are producer surplus at market equilibrium price : What area(s) are producer surplus at the market equilibrium price? Compared to the equilibrium, what area(s) do consumers lose if price is P2?

What is the value of consumer surplus at the given price : Use the market represented in to draw the consumer surplus when the market price is $8. What is the value of consumer surplus at this price?

Explain what is meant byembourgeoisement : Explain what is meant byembourgeoisement and proletarianisationusing example to illustrate your answer.

User Account

All Pages