Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The firm PAR inc. forecasts monthly disbursements of $ 75,000 over the next year. The firm invests its cash in treasury bills at an annual

The firm PAR inc. forecasts monthly disbursements of $ 75,000 over the next year. The firm invests its cash in treasury bills at an annual rate of 30%. A treasury bill transaction costs the firm $ 150. a) What would be the optimal amount of treasury bills that the business must sell to minimize the total cost of cash on hand during the year? b) What would that total cost of cash be during the year?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions