User Account

All Pages

Minimum cost cash balance

Assignment Help Finance Basics
Reference no: EM131041332

Halliday Inc. receives a $2 million payment once a year. Of thisamount, $600,000 is needed for cash payments made during the nextyear. Each time Halliday deposits money in its account, a charge of$2.00 is assessed to cover clerical costs. If Halliday can holdmarketable securities that yield 5 percent, and then convert thesesecurities to cash at a cost of only the $2 deposit charge, what isthe total cost for one year of holding the minimum cost cash balance according to the Baumol model?

Reference no: EM131041332

Questions Cloud

Initial fixed asset investment : A project will produce an operating cash flow of $14,600 a year for 8 years. The initial fixed asset investment in the project will be $48,900
Create a form on conducting a physical inventory count : Create a form and its accompying instructions on conducting a physical inventory count. the instructions should have numbered steps and visual aids from the form you created.
Analyzing spss (pasw) software : For this assignment you use SPSS (PASW) software and learn to properly munipulate data according the APA requirements. This is an important skill and will be a major factor in future assignments in this course, your doctoral studies and dissertati..
Constant-growth formula for valuation : Suppose that in 2015 the expected dividends of the stocks in a broad market index equaled $210 million when the discount rate was 7% and the expected growth rate of the dividends equaled 5%. Using the constant-growth formula for valuation, if inte..
Minimum cost cash balance : If Halliday can holdmarketable securities that yield 5 percent, and then convert thesesecurities to cash at a cost of only the $2 deposit charge, what isthe total cost for one year of holding the minimum cost cash balance according to the Baumol m..
Analyze data to make management decisions : What were the most compelling topics learned in this course and how did participating in discussions help your understanding of the subject matter? Is anything still unclear that could be clarified?
What is the cost of equity : Southern Home Cookin' just paid its annual dividend of $0.65 a share. The stock has a market price of $13 and a beta of 1.12. The return on the U.S. Treasury bill is 2.5 percent and the market risk premium is 6.8 percent. What is the cost of equit..
Firm weighted average cost of capital : The preferred stock sells for $53 a share. The common stock has a beta of 1.34 and sells for $42 a share. The U.S. Treasury bill is yielding 2.8 percent and the return on the market is 11.2 percent. The corporate tax rate is 38 percent. What is th..
Evidence of critical evaluation : LAW302 Law of Business Organizations - Assessment Criteria Marks will be awarded having regard to: Focus on addressing the essay topic, Evidence of critical evaluation, Development of effective arguments in relation to the essay topic

Reviews

Write a Review

Finance Basics Questions & Answers

  Stock valuation of hewlett-packard stock using of capm

Using the required rate of return calculated in part (a) and the Discounted Cash Flow Model, compute the intrinsic value of a share of Hewlett-Packard Stock. What assumptions, if any, was it necessary to make?

  Explain the scope and significance of the dividend policy

dividend policy-1. discuss the view that dividend policy is a more detail and has no impact on a firm to its

  Which strategy works best if a bidding war erupts

If you were Smith's financial advisor, which strategy would you advise he establish? Or would you argue that he not speculate on this takeover?

  Which of the following statements about the relevant range

Which of the following statements about the relevant range is true?

  What is the maximum price per share

Eastern has 4 million shares outstanding and no debt. Eastern's current price is $16.25. What is the maximum price per share that Dunbar should offer?

  Use risk-neutral probabilities

The security's price will change (up or down) by 10% during the year, and the risk-free annual effective interest rate is 5%. The no-arbitrage price of the option is $100. Use risk-neutral probabilities to find the exercise price for the option.

  The most recent financial statement for zoso inc are shown

the most recent financial statement for zoso inc. are shown here assuming no income taxesincome statementbalance

  Basic resources and transforms

The important thing to know about production or operations is that the terms refer to any process that takes basic resources and transforms them into finished products.( )

  Defines the dominant set of portfolio possibilities

Why do the line from the Risk Free Rate that is tangent to the efficient frontier defines the dominant set of portfolio possibilities?

  Stock company or a mutual company

Accounting: Do we want to be a stock company or a mutual company? What are the benefits/disadvantages of each? What types of reinsurance treaties do we need to pursue, and why?

  Should huffman systems add the new home alarm system

The manufacturing equipment will be sold off a the end of the eight years for $210,000, and the cost of capital for this project is 14%.

  A company has a current ratio of 31 at december 31 2014

a company has a current ratio of 31 at december 31 2014. which of the following transactions would decrease this

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd