Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 19.A, Problem 10QP
Using BAT Rise Against Corporation has determined that its target cash balance if it uses the BAT model is $5,100. The total cash needed for the year is $31,000, and the order cost is $10. What interest rate must Rise Against be using?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Find the Net Present Value (NPV) for Oman Car Company if the initial investment is 8000 OMR and the cash
Inflows are as follows: Year 1 =2000 OMR; Year 2 =2500 OMR; Year 3=2800 OMR and Year 4=3000 OMR. Use
discount rate as 4.004%.
Select one:
O a. 2174.15 OMR
O b. 1407.54 OMR
O c. 1307.40 OMR
O d. None of the options
O e. 1287.12 OMR
What is the profitability index for the following set of cash flows if the relevant discount rate is
10 percent? What if the discount rate is 15 percent? If it is 22 percent?
Year 0
Year 1
Year 2
Year 3
Discount rate
Discount rate
Discount rate
$
$
DELLI
$
$
(15,300)
9,400
7,600
4,300
10%
15%
22%
Complete the following analysis. Do not hard code values in your calculations.
You must use the built-in Excel function to answer this question.
Profitability index at 10 percent
A company is planning to expand its business is costing OMR 19252. The
following cash inflows are expected. Calculate Profitability index given the rate
of discounting to be 3.008%
Years
Machine A
12396
13300
12500
4
14500
2.
3.
Chapter 19 Solutions
Fundamentals of Corporate Finance
Ch. 19.1 - What is the transaction motive, and how does it...Ch. 19.1 - What is the cost to the firm of holding excess...Ch. 19.2 - Which would a firm be most interested in reducing,...Ch. 19.2 - Prob. 19.2BCQCh. 19.2 - Prob. 19.2CCQCh. 19.3 - Prob. 19.3ACQCh. 19.3 - Prob. 19.3BCQCh. 19.4 - Prob. 19.4ACQCh. 19.4 - What is a zero-balance account? What is the...Ch. 19.5 - What are some reasons why firms find themselves...
Ch. 19.5 - Prob. 19.5BCQCh. 19.5 - Why are money market preferred stocks an...Ch. 19.A - Prob. 1ACQCh. 19.A - Prob. 2BCQCh. 19.A - Describe how the MillerOrr model works.Ch. 19.A - Changes in Target Cash Balances Indicate the...Ch. 19.A - Using the BAT Model Given the following...Ch. 19.A - Prob. 3QPCh. 19.A - Prob. 4QPCh. 19.A - Determining Optimal Cash Balances The All Day...Ch. 19.A - Prob. 6QPCh. 19.A - Prob. 7QPCh. 19.A - Interpreting MillerOrr Based on the MillerOrr...Ch. 19.A - Prob. 9QPCh. 19.A - Using BAT Rise Against Corporation has determined...Ch. 19 - Prob. 19.1CTFCh. 19 - Prob. 19.2CTFCh. 19 - Prob. 19.3CTFCh. 19 - Prob. 1CRCTCh. 19 - Prob. 2CRCTCh. 19 - Prob. 3CRCTCh. 19 - Prob. 4CRCTCh. 19 - Prob. 5CRCTCh. 19 - Prob. 6CRCTCh. 19 - Collection and Disbursement Floats [LO1] Which...Ch. 19 - Prob. 8CRCTCh. 19 - Prob. 9CRCTCh. 19 - Prob. 10CRCTCh. 19 - Prob. 11CRCTCh. 19 - Prob. 12CRCTCh. 19 - Prob. 13CRCTCh. 19 - Prob. 1QPCh. 19 - Calculating Net Float [LO1] Each business day, on...Ch. 19 - Prob. 3QPCh. 19 - Float and Weighted Average Delay [LO1] Your...Ch. 19 - NPV and Collection Time [LO2] Your firm has an...Ch. 19 - Using Weighted Average Delay [LO1] A mail-order...Ch. 19 - Prob. 7QPCh. 19 - Lockboxes and Collections [LO2] It takes Cookie...Ch. 19 - Prob. 9QPCh. 19 - Prob. 10QPCh. 19 - Prob. 11QPCh. 19 - Calculating Transactions Required [LO2] Cow Chips,...Ch. 19 - Prob. 1MCh. 19 - Prob. 2MCh. 19 - Prob. 3M
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Green Corporation anticipates a cash requirement of P1,500 over a 1- month period. It is expected that cash will be paid uniformly. The annual interest rate is 24 percent. The transaction cost of each borrowing or withdrawal is P30. (a) What is the optimal cash balance? (b) What is the average cash balance? CHOOSE THE CORRECT ANSWER FOR A AND B(A) P1,432.05 and (B) P566.03(A) P2,121.32 and (B) P8060.66(A) P1,121.32 and (B) P1060.66(A) P2,121.32 and (B) P1060.66(A) P1,732.05 and (B) P866.03arrow_forwardBeyer Company is considering buying an asset for $350,000. It is expected to produce the following net cash flows. Compute the payback period for this investment. (Cumulative net cash outflows must be entered with a minus sign. Round your Payback Period answer to 2 decimal places.)arrow_forwardYou have recently been hired to improve the performance of Multiplex Corporation, which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following Information and a 365-day year, your estimate of the firm's current cash conversion cycle would be __________days Current Inventory = P120,000. Accounts receivable = P157,808. Accounts payable = P25,000. Annual sales P600,000. Total annual purchases = P365,000. Purchases credit terms: net 30 days. Receivables credit terms: net 50 days. O 100 O 49 O 144 O 168arrow_forward
- Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =1400 OMR; Year 3=1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one: a. None b. 1.69 c. 1.83 d. 1.26 e. 1.48arrow_forwardA company is planning to expand its business is costing OMR 23355. The following cash inflows are expected. Calculate Profitability index given the rate of discounting to be 3.008% Years Machine A 1 10548 2 13300 3 12500 4 14500 a. none of the options b. 23735.221 c. 0.496 d. 2.016 e. 2.029arrow_forwardA company is planning to expand its business is costing OMR 21761. The following cash inflows are expected. Calculate Profitability index given the rate of discounting to be 3.008% Years Machine A 1 14498 13300 3 12500 4 14500 Select one: O a. 2.360 O b. 29163.875 O c. none of the options O d. 0.427 O e. 2.340arrow_forward
- Dalvi Incorporated is considering a new Investment. The table below lists the cash flows. Year Cash Flows -$25,400 1 $6,300 2 $7,700 3 $11,400 Calculate the Payback period Calculate the NPV and IRR. Assume that the interest rate is 0%.arrow_forward3. follows: Carnegie Corp. projects an annual cash flow for one of its divisions as Year 0 1 2 3 4 5 6 Cash flow (SM) 3 0 -10 2 2 2 2 What is the IRR for this cash flow stream? Try plotting the NPV as a function of the discount rate. Are there any problems with using IRR for this application?arrow_forwardA company has just sold a product with the following payment plan: $75, 000 today, $50, 000 at the end of year 1. and $25, 000 at the end of year two. If the payments are deposited into an account earning 4.5% per year, calculate the present value for the cash flow. Show steps using ONLY a financial calculator. The answer should be 145,740.arrow_forward
- Find the profitability index for Oman Air conditioner Company if the initial investment is 4000 OMR and the cash Inflows are as follows: Year 1=1350 OMR; Year 2 =1400 OMR; Year 3-1450 OMR and Year 4=1500 OMR. Use discount rate as 5%. Select one:arrow_forwardXYZ Corporation has a lower and an upper limit for its savings account at P40,000 and P70,000 respectively. Its optimal return point is P50,000. If as of the end of the day, XYZ has a cash balance of P18,000. How much should it request for additional funds or (invest in marketable securities)? Because its cash balance is less than the lower cash limit, XYZ should request for additional funds in the amount of:arrow_forwardA company is planning to expand its business is costing OMR 21601. The following cash inflows are expected. Calculate Profitability index given the rate of discounting to be 3.008% Years Machine A 1 14564 2 13300 3 12500 4 14500 Select one: a. none of the options b. 0.424 c. 2.380 d. 29387.948 e. 2.360 Clear my choicearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Capital Budgeting Introduction & Calculations Step-by-Step -PV, FV, NPV, IRR, Payback, Simple R of R; Author: Accounting Step by Step;https://www.youtube.com/watch?v=hyBw-NnAkHY;License: Standard Youtube License