International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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National Co. would like to maintain its cash account at a minimum level of P25,000, but expect the standard deviation in net daily cash flows to be P2,000; the effective annual rate on marketable securities to be 7.5% per year, and the trading cost per sale or purchase of marketable securities to be P200 per transaction. What will be their optimal cash return point?
Havana, Inc. has identified an investment project with the following uneven cash flows: $0 at Year 0, $950 at Year 1, $1,180 at Year 2, $1,400 at Year 3, and $2,140 at Year 4. Assume the discount rate is 8 percent, what is the future value of these cash flows in Year 4?
a) $4,167.62
b) $6,123.60
c) $5,670.00
d) $6,225.08
Assume that Blue Bell has expected cash flows of $325,000 from domestic operations, SF250,000 from Swiss operations, and 200,000 euros from Italian operations at the end of the year. The Swiss franc's value and euro's value are expected to be $.93 and $1.37 respectively, at the end this year. What are the expected dollar cash flows of Blue Bell?
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- A risky $ 1,000 investment is expected to generate the following cash flows: Year 1 2 3 $600 $600 $600 a. If the firm's cost capital is 10 percent, should the investment be made? b. An alternative use for the $1,000 is a three-year U.S. Treasury note that pays $50 annually and repays the $1,000 at maturity for an annual risk-free return of 5 percent. Management believes that the cash inflows from the risky investment are only equivalent to 70 percent of the certain investment. Does this information alter the decision in (a)?arrow_forwardKingston, Inc. management is considering purchasing a new machine at a cost of $4,255,072. They expect this equipment to produce cash flows of $805,039, $846,614, $968,835, $1,060,543, $1,166,140, and $1,171,713 over the next six years. If the appropriate discount rate is 15 percent, what is the NPV of this investment? (Enter negative amounts using negative sign e.g. -45.25. Round answer to 2 decimal places, e.g. 15.25.) The NPV is $arrow_forwardThe management of Kawneer North America is considering investing in a new facility and the following cash flows are expected to result from the investment: Year Cash Outflow Cash Inflow 1 $1,900,000 $100,000 2 550,000 200,000 3 360,000 4 480,000 5 510,000 6 600,000 7 590,000 8 300,000 9 250,000 10 250,000 a. what is the payback period of this uneven cash flow? b. does your answer change if year 10's cash inflow changes to $500,000?arrow_forward
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