Beauty Ltd. has an excess cash of ` 16,00,000 which it wants to invest in short-term marketable securities. Expenses relating to investment will be `40000. The securities invested will have an annual yield of 8%. The company seeks your advice as to period of investment so as to earn a pre-tax income of 4%. Also, find the minimum period for the company to break-even its investment expenditure. Ignore time value of money.

Answer rating: 100% (QA)

To earn a pretax income of 4 on the excess cash of 1600000 we need to calculate the minimum invest... View the full answer