ABC Corporation would like to know what its optimal cash balance for its petty cash fund. The daily average disbursement is P5,000. ABC operates 365 days a year. Cost to transfer money into the account average P250 each time. If the money is not in this account, it could have been in an investment account earning 5% per year. Requiired: 1. Optimum cash balance 2. Total cost of holding and maintaining the optimal cash balance

ABC Corporation would like to know what its optimal cash balance for its petty cash fund. The daily average disbursement is P5,000. ABC operates 365 days a year. Cost to transfer money into the account average P250 each time. If the money is not in this account, it could have been in an investment account earning 5% per year. Requiired: 1. Optimum cash balance 2. Total cost of holding and maintaining the optimal cash balance

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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