=+6* Numerical example of treasury investment:

As the treasurer of a firm you anticipate the following cash position which will require either short-term borrowing or investment:

Cash flow forecast for an 11-day period Opening balance

£11,000,000 Day Net cash flow Cumulative 1.3.x1

-5,000,000 6,000,000 2.3.x1

-5,000,000 1,000,000 3.3.x1

-6,000,000

-5,000,000 4.3.x1 0

-5,000,000 5.3.x1

+20,000,000

+15,000,000 6.3.x1

-3,000,000

+12,000,000 7.3.x1

-2,000,000

+10,000,000 8.3.x1

+1,000,000

+11,000,000 9.3.x1 0

+11,000,000 10.3.x1

- 500,000

+10,500,000 11.3.x1

+2,000,000

+12,500,000 The interest rates available are:

Borrowing rate Lending rate Interbank overnight 54%
51%
Interbank seven-day 6.1 %
Time deposit (seven-day)
5%
Sight deposit at bank 4%
Borrowing on overdraft