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75. BOGO Shoes would like to maintain their cash account at a minimum level of $100,000,
but expects the standard deviation in net daily cash flows to be $7,000; the effective annual rate
on marketable securities to be 6.5 percent per year; and the trading cost per sale or purchase of
marketable securities to be $175 per transaction. What will be their optimal cash return point?
76. Hollywood Shoes would like to maintain their cash account at a minimum level of
$50,000, but expects the standard deviation in net daily cash flows to be $4,000; the effective
annual rate on marketable securities to be 6 percent per year; and the trading cost per sale or
purchase of marketable securities to be $100 per transaction. What will be their optimal upper
cash limit?
77. Happy Feet would like to maintain their cash account at a minimum level of $75,000, but
expects the standard deviation in net daily cash flows to be $5,000; the effective annual rate on
marketable securities to be 7 percent per year; and the trading cost per sale or purchase of
marketable securities to be $150 per transaction. What will be their optimal upper cash limit?
78. Stellar Shoes would like to maintain their cash account at a minimum level of $25,000,
but expects the standard deviation in net daily cash flows to be $2,000; the effective annual rate
on marketable securities to be 5 percent per year; and the trading cost per sale or purchase of
marketable securities to be $100 per transaction. What will be their optimal upper cash limit?
79. Joe's Burgers would like to maintain their cash account at a minimum level of $300,000,
but expects the standard deviation in net daily cash flows to be $20,000; the effective annual rate
on marketable securities to be 5.2 percent per year; and the trading cost per sale or purchase of
marketable securities to be $22.55 per transaction. What will be their optimal upper cash limit?
80. JohnBoy Industries has a cash balance of $59,000; accounts payable of $139,000;
inventory of $115,000; accounts receivable of $220,000; notes payable of $175,000; and accrued
wages and taxes of $23,000. How much net working capital does the firm need to fund?
81. Dandee Lions, Inc. has a cash balance of $105,000; accounts payable of $290,000;
inventory of $213,000; accounts receivable of $310,000; notes payable of $95,000; and accrued
wages and taxes of $65,000. How much net working capital does the firm need to fund?
82. If a firm has a cash cycle of 71 days and an operating cycle of 139 days, what is its
average payment period?
83. If a firm has a cash cycle of 75 days and an operating cycle of 120 days, what is its
payables turnover?
84. If a firm has a cash cycle of 41 days and an operating cycle of 76 days, what is its average
payment period?
85. If a firm has a cash cycle of 38 days and an operating cycle of 82 days, what is its
payables turnover?
86. What must the rate be less than to be worth it to incur a compensating balance of
$20,000 in order to get a 2 percent lower interest rate on a one-year, pure discount loan of
$200,000?
87. CM Enterprises estimates that it takes, on average, seven days for their customers'
payments to reach them, one day for the payments to be processed and deposited by their
bookkeeping department, and three more days for the check to clear once they're deposited.
What is their collection float?
88. B&B Cos. has sales of $732,000 and cost of goods sold of $323,000. The firm had a
beginning inventory of $48,000 and an ending inventory of $39,000. What is the length of the
days' sales in inventory?
89. Suppose that Dunn Industries has annual sales of $2.5 million, cost of goods sold of
$1,850,000, average inventories of $1,900,000, and average accounts receivable of $660,000.
Assuming that all of Dunn's sales are on credit, what will be the firm's operating cycle?
90. Suppose that LilyMac Photography has annual sales of $218,000, cost of goods sold of
$123,000, average inventories of $1,250, and average accounts receivable of $22,000. Assuming
that all of LilyMac's sales are on credit, what will be the firm's operating cycle?
91. Suppose that LilyMac Photography has annual sales of $290,000; cost of goods sold of
$155,000; average inventories of $3,500; average accounts receivable of $21,000; and an average
accounts payable balance of $10,000. Assuming that all of LilyMac's sales are on credit, what will
be the firm's cash cycle?
92. Suppose your firm is seeking a seven-year, amortizing $400,000 loan with annual
payments and your bank is offering you the choice between a $410,000 loan with a $10,000
compensating balance and a $400,000 loan without a compensating balance. If the interest rate
on the $400,000 loan is 9.5 percent, how low would the interest rate on the loan with the
compensating balance have to be in order for you to choose it?
93. Rose Axels faces a smooth annual demand for cash of $8 million; incurs transaction costs
of $200 every time they sell marketable securities; and can earn 3.8 percent on their marketable
securities. What will be their optimal cash replenishment level?
94. HotFoot Shoes would like to maintain their cash account at a minimum level of $35,000,
but expect the standard deviation in net daily cash flows to be $2,000; the effective annual rate
on marketable securities to be 5 percent per year; and the trading cost per sale or purchase of
marketable securities to be $210 per transaction. What will be their optimal cash return point?
