The Sandbox's Company has cash needs of P5 million per month. If Sandbox needs more cash, it can sell marketable securities, incurring a fee of P300 for each transaction. If Sandbox leaves its funds in marketable securities, it expects to earn approximately 0.50% per month on their investment. 1. If Sandbox gets a cash infusion of P1 million each time it needs cash, how much would be the average cash balance associated with its cash investment? 2. If Sandbox gets a cash infusion of P1 million each time it needs cash, what are the total costs per month associated its cash infusions?
The Sandbox's Company has cash needs of P5 million per month. If Sandbox needs more cash, it can sell marketable securities, incurring a fee of P300 for each transaction. If Sandbox leaves its funds in marketable securities, it expects to earn approximately 0.50% per month on their investment. 1. If Sandbox gets a cash infusion of P1 million each time it needs cash, how much would be the average cash balance associated with its cash investment? 2. If Sandbox gets a cash infusion of P1 million each time it needs cash, what are the total costs per month associated its cash infusions?
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 11MC
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The Sandbox's Company has cash needs of P5 million per month. If Sandbox needs more cash, it can sell marketable securities, incurring a fee of P300 for each transaction. If Sandbox leaves its funds in marketable securities, it expects to earn approximately 0.50% per month on their investment.
1. If Sandbox gets a cash infusion of P1 million each time it needs cash, how much would be the average cash balance associated with its cash investment?
2. If Sandbox gets a cash infusion of P1 million each time it needs cash, what are the total costs per month associated its cash infusions?
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