On an Average Day, a Company Writes Checks Totaling $1,500

question 13

Multiple Choice

On an average day, a company writes checks totaling $1,500. These checks take 7 days to clear. The company receives checks totaling $1,800. These checks take 4 days to clear. The cost of debt is 9%. If the average daily float is $3,300, what is the net present value per day?

• A) -282.48
• B) -79.41
• C) -297.00
• D) -0.81

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Definitions:

Total Return

The overall financial gain or loss on an investment, including both capital appreciation/depreciation and income like dividends and interest over a given time period.

U.S. Dollars

The official currency of the United States, widely used as a global reserve currency and standard for international transactions.

International Stocks

Shares of companies based outside of an investor's home country, offering diversification benefits.

Portfolio Risk

The potential for loss due to the variability of returns from the various securities in a portfolio.