Question 1

You are considering opening a lockbox.Calculate the net benefit of the lockbox per day given the information provided.
 $$\begin{array}{l}
\begin{array} { | l | r | } 
\hline\text { Data: }\
\hline \text { Average number of daily payments to lockbox } & 450 \
\hline \text { Average value of payment } & \mathbf { \$ 3 , 0 0 0 } \
\hline \text { Rate of interest per day } & 0.015 \% \
\hline \text { Savings in mailing time (days) } & 1.1 \
\hline \text { Savings in processing time (days) } & 0.6 \
\hline \text { Bark charge per cheque } & \mathbf { \$ 0 . 3 0 } \
\hline
\end{array}
\end{array}$$

Accepted Answer

The answer of You are considering opening a lockbox.Calculate the...

Question 2

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80.
What is the bank's ledger balance?

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The answer of Your bank account currently shows a balance...

Question 3

Suppose you have weekly cash expenses of $150.The bank charges $0.25 every time cash is withdrawn.The bank pays 1.5% interest per year.Given this information, what is the optimal withdrawal size? What is the average amount of cash on hand? How often should you withdraw funds?

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The answer of Suppose you have weekly cash expenses of...

Question 4

If cash flows change unpredictably, then management should allow the cash balance to move within limits.What three factors determine how far apart these limits? How far should the firm adjust its cash balance when it reaches this upper or lower limit?

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Question 5

What are the cost and benefits of holding cash?

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Question 6

Discuss the distinction of playing the float versus cheque kiting.

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Question 7

What is float and why can it be valuable?

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Question 8

Where do firms invest excess funds until they are needed to pay bills?

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Question 9

Bang Corporation expects to sell 60,000 toys this year.The cost of placing an order is $75 per order, while the carrying cost per unit is $1.25.Given this information, calculate the company's EOQ, carrying cost, ordering cost and total cost.

Accepted Answer

The answer of Bang Corporation expects to sell 60,000 toys...

Question 10

Micro expects to sell 8,000 microwaves this year.The cost of placing an order is $150 per order, while the carrying cost per unit is $5.50.Given this information, calculate the company's EOQ, carrying cost, ordering cost and total cost.

Accepted Answer

The answer of Micro expects to sell 8,000 microwaves this...

Question 11

What are the cost and benefit of holding inventories?

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Question 12

Suppose you have weekly cash expenses of $400.The bank charges $0.4 every time cash is withdrawn.The bank pays 1% interest per year.Given this information, what is the optimal withdrawal size? What is the average amount of cash on hand? How often should you withdraw funds?

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Question 13

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80.
What is the payment float?

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Question 14

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80.
Show that your ledger balance plus payment float equals the bank's ledger balance, which in turn equals the available balance plus availability float.

Accepted Answer

The answer of Your bank account currently shows a balance...

Question 15

Suppose rate of interest increases from 5% to 9% per year.How would firms' cash balance change relative to sales? What would happen when interest rates change from 9% to 5%?

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Question 16

A corporation has excess cash that does not appear to be needed for several months.How can they evaluate the differences between parking their funds in commercial paper versus repurchase agreements?

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Question 17

What are some tactics to increase net float?

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Question 18

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80.What is the ledger balance on your account?

Accepted Answer

The answer of Your bank account currently shows a balance...

Question 19

You are considering opening a lockbox.Calculate the net benefit of the lockbox per day given the information provided.
 $$\begin{array}{l}
\begin{array} { | l | r | } 
\hline\text { Data: }\
\hline \text { Average number of daily payments to lockbox } & 150 \
\hline \text { Average value of payment } & \$ 1,200 \
\hline \text { Rate of interest per day } & 0.02 \% \
\hline \text { Savings in mailing time (days) } & 1.2 \
\hline \text { Savings in processing time (days) } & 0.8 \
\hline \text { Bark charge per cheque } & \$ 0.26 \
\hline
\end{array}
\end{array}$$

Accepted Answer

The answer of You are considering opening a lockbox.Calculate the...

Question 20

With rates of return so low on money market instruments, does it actually benefit a firm to pay close attention to cash balances?

Accepted Answer

The answer of With rates of return so low on...

Quiz 21: Cash and Inventory Management

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80. What is the bank's ledger balance?

Suppose you have weekly cash expenses of $150.The bank charges $0.25 every time cash is withdrawn.The bank pays 1.5% interest per year.Given this information, what is the optimal withdrawal size? What is the average amount of cash on hand? How often should you withdraw funds?

If cash flows change unpredictably, then management should allow the cash balance to move within limits.What three factors determine how far apart these limits? How far should the firm adjust its cash balance when it reaches this upper or lower limit?

What are the cost and benefits of holding cash?

Discuss the distinction of playing the float versus cheque kiting.

What is float and why can it be valuable?

Where do firms invest excess funds until they are needed to pay bills?

Bang Corporation expects to sell 60,000 toys this year.The cost of placing an order is $75 per order, while the carrying cost per unit is $1.25.Given this information, calculate the company's EOQ, carrying cost, ordering cost and total cost.

Micro expects to sell 8,000 microwaves this year.The cost of placing an order is $150 per order, while the carrying cost per unit is $5.50.Given this information, calculate the company's EOQ, carrying cost, ordering cost and total cost.

What are the cost and benefit of holding inventories?

Suppose you have weekly cash expenses of $400.The bank charges $0.4 every time cash is withdrawn.The bank pays 1% interest per year.Given this information, what is the optimal withdrawal size? What is the average amount of cash on hand? How often should you withdraw funds?

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80. What is the payment float?

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80. Show that your ledger balance plus payment float equals the bank's ledger balance, which in turn equals the available balance plus availability float.

Suppose rate of interest increases from 5% to 9% per year.How would firms' cash balance change relative to sales? What would happen when interest rates change from 9% to 5%?

A corporation has excess cash that does not appear to be needed for several months.How can they evaluate the differences between parking their funds in commercial paper versus repurchase agreements?

What are some tactics to increase net float?

Your bank account currently shows a balance of $1,880.You deposit $200 into the account and write a cheque for $80.What is the ledger balance on your account?

With rates of return so low on money market instruments, does it actually benefit a firm to pay close attention to cash balances?