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1.Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 9 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Time 0 1 2 3 4 5 6

Cash Flow -880 180 460 660 660 260 660

Use the PI decision rule to evaluate this project; should it be accepted or rejected?

A. 137.73%, accept

B. -137.00%, reject

C. 1.37%, accept

D. 1.37%, reject

2.Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 13 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Time 0 1 2 3 4 5 6

Cash Flow -970 170 430 630 630 230 630

Use the discounted payback decision rule to evaluate this project; should it be accepted or rejected?

A. 2.78 years, accept

B. 3.14 years, reject

C. 2.88 years, accept

D. 3.12 years, reject

3.Hollywood Shoes would like to maintain their cash account at a minimum level of $56,000, but expect the standard deviation in net daily cash flows to be $4,600; the effective annual rate on marketable securities to be 6.25 percent per year; and the trading cost per sale or purchase of marketable securities to be $160 per transaction. What will be their optimal cash return point?

A. $80,064.97

B. $77,315.83

C. $60,600.00

D. $80,818.06

4.Hollywood Shoes would like to maintain their cash account at a minimum level of $56,000, but expect the standard deviation in net daily cash flows to be $4,600; the effective annual rate on marketable securities to be 6.25 percent per year; and the trading cost per sale or purchase of marketable securities to be $160 per transaction. What will be their optimal upper cash limit? (Round your answer to the nearest dollar amount.)

)

A. $60,600

B. $77,315.83

C. $130,454.18

D. $80,064.97

5. Rose Resources faces a smooth annual demand for cash of $11.0 million; incurs transaction costs of $375 every time they sell marketable securities, and can earn 4.9 percent on their marketable securities. What will be their optimal cash replenishment level? (Round your answer to 2 decimal places.)

A. $410,325.90

B. $29,014.42

C. $37,302.35

D. $290,144.23

6. Suppose that Tucker Industries has annual sales of $6.60 million, cost of goods sold of $2.94 million, average inventories of $1,205,000, and average accounts receivable of $660,000. Assuming that all of Tucker's sales are on credit, what will be the firm's operating cycle? (Round your answer to 2 decimal places.)

A. 113.10

B. 186.10

C. 149.60

D. 36.50