Hardrock Hardware PLC estimate a cash of $2 500 000 over the next five months. This amount is available to the firm in the form of marketable securities. It can earn 10% annual yield on its marketable securities. Conversion of marketable securities into cash entails a fixed cost of $750 per transaction. Determine: i. Optimum cash balance ii. Average cash holding iii. Number of transactions iv. Average number of days per transaction (assume 30 days per month) v. Total cost of holding cash balance vi. Per day usage of cash
Hardrock Hardware PLC estimate a cash of $2 500 000 over the next five months. This amount is available to the firm in the form of marketable securities. It can earn 10% annual yield on its marketable securities. Conversion of marketable securities into cash entails a fixed cost of $750 per transaction. Determine: i. Optimum cash balance ii. Average cash holding iii. Number of transactions iv. Average number of days per transaction (assume 30 days per month) v. Total cost of holding cash balance vi. Per day usage of cash
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter23: Other Topics In Working Capital Management
Section: Chapter Questions
Problem 2P: Optimal Cash Transfer Barenbaum Industries projects that cash outlays of 4.5 million will occur...
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Hardrock Hardware PLC estimate a cash of $2 500 000 over the next five months. This
amount is available to the firm in the form of marketable securities. It can earn 10%
annual yield on its marketable securities. Conversion of marketable securities into
cash entails a fixed cost of $750 per transaction.
Determine:
i. Optimum cash balance
ii. Average cash holding
iii. Number of transactions
iv. Average number of days per transaction (assume 30 days per month)
v. Total cost of holding cash balance
vi. Per day usage of cash
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