Cash settlement necessary to fund the annual payment

Assignment Help Management Theories
Reference no: EM13560378

As part of the settlement for a class action lawsuit, Hoxworth Corporation must provide sufficient cash to make the following annual payments (in thousands of dollars):


The annual payments must be made at the beginning of each year. The judge will approve an amount that, along with earnings on its investment, will cover the annual payments. Investment of the funds will be limited to savings (at 4% annually) and government securities, at prices and rates currently quoted in The Wall Street Journal.
Hoxworth wants to develop a plan for making the annual payments by investing in the following securities (par value = $1000). Funds not invested in these securities will be placed in savings.


Assume that interest is paid annually. The plan will be submitted to the judge and, if approved, Hoxworth will be required to pay a trustee the amount that will be required to fund the plan.
a. Use linear programming to find the minimum cash settlement necessary to fund the annual payments.
b. Use the dual price to determine how much more Hoxworth should be willing to pay now to reduce the payment at the beginning of year 6 to $400,000.
c. Use the dual price to determine how much more Hoxworth should be willing to pay to reduce the year 1 payment to $150,000.
d. Suppose that the annual payments are to be made at the end of each year. Reformulate the model to accommodate this change. How much would Hoxworth save if this change could benegotiated? 

Reference no: EM13560378

Questions Cloud

Calculate the net present value of each option based : Calculate the net present value of each option based on a discount rate of 5%/year. (Hint: draw a cash flow diagram for each of the two options.)
Produce to maximize the total contribution to profit : 1. The recommended number of units of each printer to produce to maximize the total contribution to profit for an 8-hour shift. What reasons might management have for not implementing your recommendation?
Determine the surface area of a 1m depth lagoon : A well mixed sewage lagoon is to be constructed to process 100000 gallons per day of raw sewage. The pollutant concentration in the raw seweage to be discharged into the lagoon is 200ppm. the organic matter in the sewage has been shown in a laborator..
Determine the cars velocity and position : A canal cut in rock (n= 0.030 is trapezoidal in section with the bottom width of 6.10m and side slopes of 1 on 1. The allowable average velocity is 0.76 m/s. What slope will produce 5.66 m^3/s
Cash settlement necessary to fund the annual payment : Use linear programming to find the minimum cash settlement necessary to fund the annual payments.
Social and environmental responsibility : Values-based service is defined as service that is firmly based on the core company values as well as social and environmental responsibility.
Determine its speed and acceleration at the instant : The motorcycle is traveling at 1 m/s when it is at A at the bottom of the ramp. If the speed is then increased at v=0.1 m/s^2, determine its speed and acceleration at the instant t=5s
What is the optimal solution : What is the optimal solution
In which the independent variable x is missing : In equation (1) notice that y plays the role of the independent variable; hence, solving it yields w(y). Then substituting w(y) into (2) we obtain a separable equation that determines y(x).

Reviews

Write a Review

 

Management Theories Questions & Answers

  The cheesecake factory overall market potential

What are your views regarding The Cheesecake Factory's overall market potential?

  Assignment is a comprehensive assessment of individual

applied leadership assessmentassignment is a comprehensive assessment of individual leadership within an organization

  Leadership skills quiz

Leadership skills quiz

  Question 1using pestle model evaluate the factors that

question 1using pestle model evaluate the factors that impact the external environment of an organization with which

  Multi-domestic, global, or transnational explain

Please have Carlos Holmes as my expert, Carlos has been working on this weekly ongoing project and understands the content

  Quality management and continuous improvement

Quality management and continuous improvement

  Question 1a quality cannot be inspected into a product it

question 1a quality cannot be inspected into a product it has to be built in from the outset. using your knowledge of

  A senior consultant at practical health care consulting firm

A senior consultant at Practical Health Care Consulting firm

  Create an integrated marketing communications campaign

Create an integrated marketing communications campaign.

  Matthew and anna made plans to marry

Matthew and Anna made plans to marry in the historic Botanic Gardens

  Discuss the concept of complementarity within the context

Discuss the concept of complementarity within the context of the operations of the two MNEs Coca-Cola and Anglo American. What equipment, components, and/or complementary products are needed in host countries as a result of their foreign operations t..

  Annotated bibliography and analysis

Annotated Bibliography and Analysis

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