360 days will be used. To the nearest peso and no decimal:

1.Linda is expecting to have total payments of 1,800,000 for one year, cost per transaction amounted to 25, and the interest rate of marketable securities is 10%. 

a.Optimal cash balance that minimizes total cost?

b.Total number of transactions or cash conversions that will be required per year?

c.Average cash balances for the period?

d.Total cost of maintaining cash balances?

2.Candy Corp cost of goods sold per year is 3,600,000. Annual operating expenses are estimated at 1,000,000, inclusive of depreciation and other non-cash expenses of 100,000. How much must the corporate minimum cash balance be if it is to be equal to 16 days requirements?

3.Sandy purchases merchandise on 20-day term. Goods are sold, on the average, 15 days after they are received. The average age of accounts receivable is 45 days. Sandy pays it payable on due date. 

a.How long in days is the normal operating cycle? 

b.What is the number of cash conversion cycles in 1 year?

4.Sister Corp takes 8 calendar days to receive and deposit customer remittances. The company is considering to adopt a lockbox system that will reduce the float time to 5 days. Average daily cash receipts are 220,000. The rate of return is 10%.

 How much is the reduction of float in cash balances associated with implementing the system?

Answer rating: 100% (QA)

QUESTION 1 a The optimal cash balance that minimizes total cost can be calculated using the following formula Optimal cash balance Square root of 2 x Total payments x Cost per transaction Interest rat... View the full answer