Calculate disbursement float-collection float and net float

Assignment Help Financial Management
Reference no: EM131016274

For the problem, ou will be calculating net float so after completing the calculation, I also want us to discuss what exactly is float and how does this affect a corporations and operating and cash cycles?

Each business day, on average, a company writes checks totaling $32,000 to pay is suppliers. The usual clearing time for the checs is four days. Meanwhile , the company is recieving payments from its customers each day in the form o checks totalling $43,000. The cash from the payments is available to the fir after two days.

a. Calculate the company’s disbursement float, collection float, and net float.

b. How would your answer to part change if the collected funds were available in one day instead of two?

Reference no: EM131016274

Questions Cloud

What is the implied risk-free rate : The prices of European call and put options on a non-dividend-paying stock with 12 months to maturity, a strike price of $120, and an expiration date in 12 months are $25 and $5, respectively. The current stock price is $135. What is the implied risk..
How the investors profit or loss varies with the stock price : The price of a stock is $40. The price of a one-year European put option on the stock with a strike price of $30 is quoted as $7 and the price of a one-year European call option on the stock with a strike price of $50 is quoted as $5. Draw a diagram ..
What is the margin requirement if the stock price : A trader writes five naked put option contracts, with each contract being on 100 shares. The option price is $10, the time to maturity is six months, and the strike price is $64. What is the margin requirement if the stock price is $58? How would the..
What is the effect on the terms of the contract : A trader has a put option contract to sell 100 shares of a stock for a strike price of $650. What is the effect on the terms of the contract of:
Calculate disbursement float-collection float and net float : For the problem, ou will be calculating net float so after completing the calculation, I also want us to discuss what exactly is float and how does this affect a corporations and operating and cash cycles? Calculate the company’s disbursement float, ..
Strategies can a firm use to optimize its cash cycle : How are the operating and cash cycles of the firm different? Why are they important? What strategies can a firm use to optimize its cash cycle?
Prepare a loan amortization schedule : The cost of a home is financed with a ?$200,000 20?-year ?fixed-rate mortgage at 4.5?%. Find the monthly payments and the total interest for the loan. Prepare a loan amortization schedule for the first three months of the mortgage.
What is difference in monthly payments between financing : Suppose that you are thinking about buying a car and have narrowed down your choices to two options. The? new-car option: The new car costs ?$28,000 and can be financed with a five-year amortized loan at 5.17?%. What is the difference in monthly paym..
Payment and the total interest for the amortized loan : Suppose that you decide to buy a car for ?$28,635?, including taxes and license fees. You $5000 for a down payment and can get a five?-year car loan at 5.07?%. Find the monthly payment and the total interest for the amortized loan. Round to the neare..

Reviews

Write a Review

Financial Management Questions & Answers

  Expected to pay the dividends

South Side Corporation is expected to pay the following dividends over the next four years: $15, $11, $10, and $6.50. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stoc..

  What is the best estimate of the intrinsic stock price

Atchley Corporation’s last free cash flow was $1.55 million. The free cash flow growth rate is expected to be constant at 1.5% for 2 years, after which free cash flows are expected to grow at a rate of8.0% forever. The firm's weighted average cost of..

  Calculate tax paid on gain on disposal

Genetic Insights Co. purchases an asset for $18,810. This asset qualifies as a seven-year recovery asset under MACRS. The seven-year fixed depreciation percentages for years 1, 2, 3, 4, 5, and 6 are 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, and 8.93%, r..

  What rate of return is required on equity-financed portion

What rate of return is required on the equity-financed portion of the R&D investment, assuming it is financed 90 percent with equity and 10 percent with debt?

  What is the yield to maturity for bond with attributes

f their retained earning balance was $450,000 last year and $912,000 how much did they pay in dividends? What is the yield to maturity for a bond with the following attributes? 12 years to maturity, $1000 Par, 10% coupon, selling price $870?

  How much is the current value of the potential credit risk

Tony Smith believes that the price of a particular underlying, currently selling at $96, will increase substantially in the next six months, so he purchases a European call option expiring in six months on this underlying. The call option has an exer..

  What is the maximum monthly mortgage payment

Grace wants to purchase a home with a list price of $250,000; she has a $25,000 down payment. Her salary is $85,000 per year. Currently, she has a $250 car payment and a student loan payment of $375. Her lender uses a housing expense ratio of 28% and..

  Determine the annual payment

Determine the annual payment on a $500,000, 12 percent business loan from a commercial bank that is to be amortized over a five-year period.

  Capital gains associated with disposal of the equipment

Equipment costing $20,000 that is a MACRS 3-year property is disposed of during the second year for $12,000. Calculate any depreciation recapture, ordinary losses, or capital gains associated with disposal of the equipment.

  Describe how the securities industry is regulated

How could the Internet help you to research an investment? Describe how the securities industry is regulated. What are four general sources of funds?  Audit standards require the auditor to consider the combined amount of misstatement early in the au..

  Initial investment-cash inflow-calculate net present value

Calculate the net present value of a 20 year project with an initial investment of $15,000 and a cash inflow of $2,000 per year. Assume that the firm has an opportunity cost of 17%.

  Use several alternative discount rate values

Use several alternative discount rate values (1% to 10%) to investigate the sensitivity of the present value of net benefits of the dam in exercise (1) to the assumed value of the real discount rate. Determine the "breakeven" value of the discount ra..

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!

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