Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A Inc. has a pool of cash that it uses to pay bills. When the cash is exhausted, it replenishes its pool by selling T-bills.
- A Inc. has a pool of cash that it uses to pay bills. When the cash is exhausted, it replenishes its pool by selling T-bills. The firm disburses P600,000 in cash every year, and every sale of T-bills costs P60. The current risk-free rate is 8%. What is the optimal cash balance for A Inc.?
- A firm needs a total of P30M in new cash for transaction purposes. The annual interest rate on marketable securities is 10% and the brokerage cost per transaction of selling securities to replenish cash is P1,000. What is the firms optimal average cash balance?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
An Introduction To Wavelet Theory In Finance
Authors: Francis In, Sangbae Kim
1st Edition
9814397830, 978-9814397834
