Question
The Sandbox's Company has cash needs of P5 million per month. If Sandbox needs more cash, it can sell marketable securities, incurring a fee of
The Sandbox's Company has cash needs of P5 million per month. If Sandbox needs more cash, it can sell marketable securities, incurring a fee of P300 for each transaction. If Sandbox leaves its funds in marketable securities, it expects to earn approximately 0.50% per month on their investment. Answer the following problems below.
If Sandbox gets a cash infusion of P1 million each time it needs cash, what are the holding costs associated with its cash investment?
Using the EOQ model, what level of cash infusion minimizes Sandbox's costs associated with cash?
If Sandbox gets a cash infusion of P1 million each time it needs cash, what are the transactions costs per month associated its cash infusions?
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