Homework 2023 Business Finance
2023 17 8 Assume that interest rate parity holds In both the spot market and the 90 day
17-8 Assume that interest rate parity holds. In both the spot market and the 90-day forward
market, 1 Japanese yen equals 0.0086 dollar. In Japan, 90-day risk-free securities yield
4.6%. What is the yield on 90-day risk-free securities in the United States?
28-1. The Gentry Garden Center sells 90,000 bags of lawn fertilizer annually. The optimal safety
stock (which is on hand initially) is 1,000 bags. Each bag costs the firm $1.50, inventory
carrying costs are 20%, and the cost of placing an order with its supplier is $15.
a. What is the Economic Ordering Quantity?
b. What is the maximum inventory of fertilizer?
c. What will be the firm’s average inventory?
d. How often must the company order?
28-2. Barenbaum Industries projects that cash outlays of $4.5 million will occur uniformly
throughout the year. Barenbaum plans to meet its cash requirements by periodically
selling marketable securities from its portfolio. The firm’s marketable securities
are invested to earn 12%, and the cost per transaction of converting securities to
cash is $27.
a. Use the Baumol model to determine the optimal transaction size for transfers from
marketable securities to cash.
b. What will be Barenbaum’s average cash balance?
c. How many transfers per year will be required?
d. What will be Barenbaum’s total annual cost of maintaining cash balances? What
would the total cost be if the company maintained an average cash balance of $50,000
or of $0 (it deposits funds daily to meet cash requirements)?
We give our students 100% satisfaction for their assignment, which is one of the most important reasons students prefer us from other helpers. Our professional group and planners have more than ten years of rich experience. The only reason that our inception days, we have helped more than 100000 students with their assignments successfully. Our expert’s group have more than 2200 professionals of different topics, and that not all; we get more than 300 jobs every day more than 90% of the assignment get the conversion for payment.
Place Order Now