Question
Theo's Bar & Grill needs GHS 147,000 a week to pay bills. The standard deviation of the weekly disbursements is GHS 9,600. The firm has
Theo's Bar & Grill needs GHS 147,000 a week to pay bills. The standard deviation of the weekly disbursements is GHS 9,600. The firm has established a lower cash balance limit of GHS 40,000. The applicable interest rate is 3.5 percent and the fixed cost of transferring funds is GHS 45. Based on the BAT model, what is the optimal average cash balance?
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Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
