Question

The above respectable company has set a minimum balance of $1,000. The daily variance of cash...

  1. The above respectable company has set a minimum balance of $1,000. The daily variance of cash flows is $1 million, the transaction cost of adjusting the cash balance is $1,000, and the interest rate is 15 percent. Use the Miller and Orr model to find the target cash balance and the upper cash balance.
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

AS NOTHING WAS MENTIONED, 360 DAYS ASSUMED, ANY CHANGE, LET ME KNOW, WILL CALCULATE ACCORDINGLY

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
variance of daily net cash flows = 500,000 short term inv. rates = 1.75% transaction costs...
variance of daily net cash flows = 500,000 short term inv. rates = 1.75% transaction costs = $100 annual cash disbursements = 14,709,000 firm préfère minimum cash position = 25,000 use miller-Orr to determine value for z*, the return point, and upper control lim.
North CO (NC), through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It...
North CO (NC), through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates in four segments: Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services. The company also constructs, acquires, owns, and manages power generation assets, including renewable energy facilities and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations....
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $251,000...
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $251,000 but expects the standard deviation in net daily cash flows to be $12,600, the effective annual rate on marketable securities to be 4.3 percent per year, and the trading cost per sale or purchase of marketable securities to be $30.50 per transaction. What will be its optimal upper cash limit? (Use 365 days a year. Do not round intermediate calculations and round your final...
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $250,000...
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $250,000 but expects the standard deviation in net daily cash flows to be $12,500, the effective annual rate on marketable securities to be 5.2 percent per year, and the trading cost per sale or purchase of marketable securities to be $30.00 per transaction What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations and round your answer...
HotFoot Shoes would like to maintain its cash account at a minimum level of $39,000, but...
HotFoot Shoes would like to maintain its cash account at a minimum level of $39,000, but expects the standard deviation in net daily cash flows to be $5,400, the effective annual rate on marketable securities to be 6.1 percent per year, and the trading cost per sale or purchase of marketable securities to be $160 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations and round your answer to...
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $262,000...
Veggie Burgers, Inc., would like to maintain its cash account at a minimum level of $262,000 but expects the standard deviation in net daily cash flows to be $13,700, the effective annual rate on marketable securities to be 4.0 percent per year, and the trading cost per sale or purchase of marketable securities to be $36.00 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations and round your answer...
The George Company has a policy of maintaining an end-of-month cash balance of at least $39,000....
The George Company has a policy of maintaining an end-of-month cash balance of at least $39,000. In months where a shortfall is expected, the company can draw in $1,000 increments on a line of credit it has with a local bank, at an interest rate of 12% per annum. All borrowings are assumed for budgeting purposes to occur at the beginning of the month, while all loan repayments (in $1,000 increments of principal) are assumed to occur at the end...
Jefferson Company has the following information: Cash Balance, April 31                              &nbs
Jefferson Company has the following information: Cash Balance, April 31                                                $45,000 Dividends paid in May                                                12,000 Cash paid for operating expenses in May                 36,800 Equipment depreciation expense in May                    4,500 Patent amortization expense in May                            2,000 Cash collections on sales in May                                99,000 Merchandise purchases paid in May                         56,200 Purchase equipment for cash in May                         17,500 Jefferson Company wants to keep a minimum cash balance of $15,000. Assume that borrowing occurs at the beginning of the month and repayments occur...
A company has a proposed 2-year project with the cash flows shown below and would like...
A company has a proposed 2-year project with the cash flows shown below and would like to calculate the NPV of this project so that they can decide whether to pursue the project or not. The company has a target capital structure of 60% equity and 40% debt. The beta for this firms stock is 1, the risk-free rate is 4.2, and the expected market risk premium is 5.8%. The bonds for this company pay interest semiannually and have a...
1.The Rowd Company has an average accounts payable balance of $250,000. Its average daily cost of...
1.The Rowd Company has an average accounts payable balance of $250,000. Its average daily cost of goods sold is $14,000, and it receives terms of 2/15, net 40, from its suppliers. Rowd chooses to forgo the discount. Is the firm managing its accounts payable well? Rowd’s accounts payable days outstanding is $250,000/$14,000 = 17.9 days. If Rowd made payment three days earlier, it could take advantage of the 2% discount. If for some reason it chooses to forgo the discount,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT