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3... The following information was taken from Indriks Company’s cash budget for the month of July:...

3...

The following information was taken from Indriks Company’s cash budget for the month of July:

                              Beginning cash balance             $150,000

                              Cash receipts                                95,000

                              Cash disbursements                   170,000

            If the company has a policy of maintaining a minimum end of the month cash balance of $125,000, the amount the company would have to borrow is

4...A company has a minimum required rate of return of 9% and is considering investing in a project that costs $175,000 and is expected to generate cash inflows of $70,000 at the end of each year for three years.  The net present value of this project is

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Answer #1

3) Calculate following

Beginning Cash balance 150000
Cash receipt 95000
Total Cash available 245000
Less: Cash disbursement -170000
Preliminary Cash balance 75000
Desired cash balance 125000
Borrow 50000

4) Net present value = Present value of cash inflow -Present value of cash outflow = (70000*2.53129)-175000 = 2190

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