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A firm maintains a separate account for cash disbursements. Total disbursements are $135,000 per month, spread evenly over the month. Administrative and transaction costs of
A firm maintains a separate account for cash disbursements. Total disbursements are $135,000 per month, spread evenly over the month. Administrative and transaction costs of transferring cash to the disbursement account are $11 per transfer. Marketable securities yield 2% per month. Determine the size and number of transfers that will minimize the cost of maintaining the special account |
Optimal size of transfers $ |
Average number of transfers per month |
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