Answered: 3. Disbursement float in pesos if the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 1P

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Answer the given problems. Use 360 days in a year.

Problem B: Disbursement Float
ABC disburses P100,000 each day. It would like to issue checks instead of its current policy of paying in cash. Opening a
disbursement account will cost P500 outright but another P400 per month will be incurred for the checkbook. The
disbursement float will be 7 days based on expert advice. The return on money marketable securities is 5%.
Required:
3. Disbursement float in pesos if the entity issues checks
4. Annual return on the disbursement float
5. Cost of the checking account for the first year
6. Net Advantage or (Disadvantage) of opening the disbursement account

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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