14:14 0.10KB/s4G4GO VPN 4GI 62%INDIVIDUAL activity fo...capital managementNAME:SECTION:BAUMOL CASH MANAGEMENT MODELABC Company uses the BAUMOL CASH MANAGEMENT MODEL to determine its optical cashbalance.For the coming year, the expected cash disbursements total P432,000. The interest rate on marketablesecurities is 55 per annum. The fixed cost of selling marketable securities is P8 per transaction.Compute for:1. optimal cash balance2. average cash balanceEOQ MODELThe following information are available for XYZ Corporation's Material E.Annual usage= 12,600 unitsWorking days per year 360daysNormal lead time= 20daysThe units of Material E are required evenly throughout the year.What is the reorder point?Assuming that occasionally, the company experiences delay in the delivery of Material X, suchthat the lead time reaches a maximum of 30days, how many units of safety stock should the companymaintain and what is the reorder point?

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BAUMOL CASH MANAGEMENT MODEL ABC Company uses the BAUMOL CASH MANAGEMENT MODEL to determine its optical cash balance. For the coming year, the expected cash disbursements total P432,000. The interest rate on marketable securities is 55 per annum. The fixed cost of selling marketable securities is P8 per transaction. Compute for: 1. optimal cash balance 2. average cash balance

BAUMOL CASH MANAGEMENT MODEL ABC Company uses the BAUMOL CASH MANAGEMENT MODEL to determine its optical cash balance. For the coming year, the expected cash disbursements total P432,000. The interest rate on marketable securities is 55 per annum. The fixed cost of selling marketable securities is P8 per transaction. Compute for: 1. optimal cash balance 2. average cash balance

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 2P: Optimal Cash Transfer Barenbaum Industries projects that cash outlays of 4.5 million will occur...

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Optimal Cash Transfer Barenbaum Industries projects that cash outlays of 4.5 million will occur uniformly throughout the year. Barenbaum plans to meet its cash requirements by periodically selling marketable securities from its portfolio. The firms marketable securities are invested to earn 12%, and the cost per transaction of converting securities to cash is 27. a. Use the Baumol model to determine the optimal transaction size for transfers from marketable securities to cash. b. What will be Barenbaums average cash balance? c. How many transfers per year will be required? d. What will be Barenbaums total annual cost of maintaining cash balances? What would the total cost be if the company maintained an average cash balance of 50,000 or of 0 (it deposits funds daily to meet cash requirements)?
CASE 3 Pinocchio Inc. has a total annual cash requirement of P9,075,000 which are to be paid uniformly. Simile has the opportunity to invest the money at 24% per annum. The company spends, on the average, P40 for every cash conversion to marketable securities. Required: 1. Compute for the optimal cash conversion size. 2. Determine the average cash balance. 3. Determine the number of transactions. 4. How much is the total holding cost? 5. How much is the total transaction cost? 6. How much is the total cost of cash? 7. What will be your advice to the management?
Problem 4 (Determination of Optimal Average Cash Balance Using Baumol Model) Javpee Inc., has two dates when it receives its cash inflows (February 15 and August 15). On each of these dates, it expects to receive P30 million. Cash expenditure are expected to be steady throughout the subsequent 6-month period. Presently, the ROI in marketable securities is 8% per annum, and the cost of transfer from securities to cash isP125 each time a transfer occurs. Required: a. What is the optimal transfer size using the Baumol model? What is the average cash balance? b. What would be the answer to (a) if the ROI were 12% per annum and the transfer costs were P75? Why do they differ from those in (a)?
3 nts Problem 07.037 - MIRR calculation For the net cash flow series, find the external rate of return (EROR) using the MIRR method with an investment rate of 21% per year and a borrowing rate of 8% per year. Year Net Cash Flow, $ 1 3,000 The external rate of return is 10.85 %. 2 -9,000 3 -5,000 Return to question 4 8,000 5 -2,500
Problem 07.037 - MIRR calculation For the net cash flow serles, find the external rate of return (EROR) using the MIRR method with an Investment rate of 16% per year and a borrowing rate of 11% per year. Year Net Cash Flow, $ 2. 4 4,000 -3.000 -4,000 3.000 -1,300 4,500 The external rate of return is 20.01 O %.
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What is the present value of an investment with the following cash flows? Year 1 $14,000 Year 2 $20, 000 Year 3 $30,000 Year 4. $ 43,000 Year 5. $ 57,000 Use a 7% discount rate, and round your answer to the nearest $1. a. $128, 487 b. $107, 328 c. $112, 346 d. $ 153, 272
10. Makmak Corporation uses the Baumol Cash Management Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total P432,000. The interest rate on marketable securities is P8 per transaction. What is the optimal Cash Balance of the company? A. P1,175.76 C. P11,757.55 B. P5,878.78 D. P142,000
181 An investor is considering a business opportunity with the anticipated re- ceipts and disbursements shown in the following table. Calculate the net cash flow representing this investment, and then find the present worth of the net cash flow for an interest rate of 0% and 12%. Answer: $175,000; –$12,915 End of Year Disbursements Receipts $300,000 75,000 25,000 30,000 $ 20,000 60,000 1 135,000 180,000 210,000 4
Problem 13: Value of a Mixed Stream Find the present value of the streams of cash flows shown in the following table. Assume that the firm's opportunity cost is 12%. A B C Year Cash Flow Year Cash Flow Year 1 - $2,000 1 $ 10,000 1-5 Cash Flow $ 10,000/yr 8,000/yr 2 3,000 2-5 6-10 4,000 6 6,000 8,000 3 4 5 5,000/yr 7,000
Problem A: Baumol ModelABC Corporation would like to know what is its optimal cash balance for a disbursement account. The daily averagedisbursement is P40,000. Cost to transfer money into the account average P500 each time. If the money is not in this account,it could have been kept in a mutual fund account that would let ABC earn 3% per year.Required:1. Optimum cash balance2. Total cost of holding and maintaining the optimal cash balance
Year Cash Flow $275.000 1 $35.00 2 S65,000 36 S25.000 $13500 $185.000 9-20 $245,000 Given the following cash flows and if MARR-24%? Ans xx What is the Simple Payback Period? Ans XX What is the Discounted Payback Penod? 01 7 8.