Intro

Never Finis Inc. needs $500,000 in cash per year and has a policy of selling marketable securities every week. The interest rate on marketable securities is 2.8% and it costs $40 to buy or sell securities.

Attempt 3/10 for 8.5 pts.

Part 1

What are the trading costs with the current policy?

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Attempt 4/10 for 8.5 pts.

Part 2

What are the opportunity costs with the current policy?

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Attempt 1/10 for 8.5 pts.

Part 3

What are the total costs of the current policy?

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Attempt 1/10 for 8.5 pts.

Part 4

What is the target cash balance according to the BAT model?

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Attempt 2/10 for 8.5 pts.

Part 5

What is the total cost of the best policy?

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