Why do firms have trouble managing their cash flow

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Reference no: EM131962380

1. Assume a 10% discount rate (assume you can invest and borrow at 10%). Compute (with Excel):

(a) $10,000 in cash or $1,000 per year for perpetuity (first payment at the end of the first period).

(b) $10,000 in cash or $1,100 per year for perpetuity (first payment at the end of the first period).

2. Why do firms have trouble managing their cash flow? What events cause a cash flow crisis?

3. Convert 6% APR to the corresponding EAR, assuming a) Annual compounding, b) quarterly compounding, c) monthly compounding, d) daily compounding, and e) continuous compounding: Using Excel.

Reference no: EM131962380

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