Question regarding the playing the float

Assignment Help Finance Basics
Reference no: EM131100936

Playing the float. Clay Travel, Inc. routinely funds its checking account to cover all checks when written. A thorough analysis of its checking account discloses that the firm could maintain an average account balance that is 25% below the current level and adequately cover all checks presented. The average account balance is currently $900,000. If the firm can earn 10% on short-terms investments, what, if any, annual savings would result form maintaining the lower average account balance?

Direct send-Single. Ocean Research of San Diego, California, just received a check in the amount of $800,000 from a customer in Bangor, Maine. If the firm processes the check in the normal manner, the funds will become available in 6 days. To speed up this process, the firm could send an employee to the bank in Bangor in which the check is drawn to present it for payment. Such action will cause the funds to become available after 2 days. If the cost of the direct send is $650 and the firm can earn 11% on these funds, what recommendation would you make? Explain.

Reference no: EM131100936

Questions Cloud

Compute the minimum required op amp gain : Compute the minimum required op amp gain.
Simplify the function using a k-map to form sum of products : Simplify the function using a K-map to form a sum of products. Implement the SOP using NAND gates alone. Draw the full gate diagram, making sure to implement all the inverters with NAND gates
Discounted cash flow approach, what is its cost of equity : a. Using the discounted cash flow approach, what is its cost of equity? b. If the firm's beta is 1.6, the risk-free rate is 9 percent, and the expected return on the market is 13 percent, what will be the firm's cost of equity using the CAPM approach..
Where mesopotamia the cradle of civilization is located : The Aswan High Dam was built as a result of the Nile Waters Agreement, concluded between: and The mountainous region running through northern Morocco, Algeria and Tunisia is the:
Question regarding the playing the float : Playing the float. Clay Travel, Inc. routinely funds its checking account to cover all checks when written. A thorough analysis of its checking account discloses that the firm could maintain an average account balance that is 25% below the curre..
Problems in the wan found in the virtual organizations : Write the assessment for Riordan Manufacturing using the service request SR-rm-008 Legacy Problems in the WAN found in the Virtual Organizations.
What is the firm''s component cost of debt : A company's 6 percent coupon rate, semiannual payment, $1,000 par value bond which matures in 30 years sells at a price of $515.16. The company's federal-plus state tax rate is 40 percent. What is the firm's component cost of debt for purposes of cal..
Effect on flychuckers eps and pe ratio : a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. b. What will be the effect on Flychuckers EPS and PE ratio under the two different scenarios?
What is the cost of the preferred stock for trivoli : Trivoli Industries plans to issue some $100 par preferred stock with an 11 percent dividend. The stock is selling on the market for $97.00, and Trivoli must pay flotation costs of 5 percent of the market price. What is the cost of the preferred stock..

Reviews

Write a Review

Finance Basics Questions & Answers

  Type of no-fault auto insurance laws to compensate

A number of states have passed some type of no-fault auto insurance laws to compensate injured auto accident victims. a. Describe the no-fault benefits that are typically paid in a state with a no-fault law.

  When evaluating asset-backed securitization issues which of

when evaluating asset-backed securitization issues which of the following would be least important during the investors

  Determine strategies for the company

Make recommendations on potential discretionary financing needs. Write a 350 - 700 word analysis of the company's short term and long term financing needs and determine strategies for the company to manage working capital

  Shareholder value analysis notes and exercise

Shareholder Value Analysis (SVA) is one member of the family of techniques for determining the market value of a firm based on the drivers of its projected cash flows. Other cash-based techniques include Cash Flow Return on Investment (CFROI) a..

  The project is estimated to generate 2110000 in annual

keiper inc. is considering a new three-year expansion project that requires an initial fixed asset investment of 2.79

  What are scott healthcares return on sale and asset turnover

Scott also had average assets of $250,000 for the year. What are Scott Healthcare's return on sales, asset turnover, and return on investment?

  What might a large value for this ratio imply

How long on average did it take for the company did it take the company to pay off its suppliers during the year? What might a large value for this ratio imply?

  Conservative asset financing and aggressive asset policy

Determine the relative advantages and disadvantages of a conservative asset financing policy and an aggressive asset financing policy?

  The companys tax rate is 30 and its discount rate is 8 the

a company needs an increase in working capital of 30000 in a project that will last 4 years. the companys tax rate is

  Determine dividend payout ratio

Earnings per share of common stock will immediately increase as a result of, An increase in the market price of a company's common stock will immediately affect its:

  Compare the traditional ira with the roth ira

Compare the traditional IRA with the Roth IRA

  What is the aftertax salvage value of the asset

An asset used in a four-year project falls in the five-year MACRS class for tax purposes. The asset has an acquisition cost of $6,020,000 and will be sold for $1,220,000 at the end of the project. If the tax rate is 35 percent, what is the afterta..

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