roblem 4 (Determination of Optimal Average Cash Balance Using Baumol Model) avpee Inc., has two dates when it receives its cash inflows (February 15 and August 15). On each of the ates, it expects to receive P30 million. Cash expenditure are expected to be steady throughout ubsequent 6-month period. Presently, the ROI in marketable securities is 8% per annum, and the cost ansfer from securities to cash isP125 each time a transfer occurs. zequired: . What is the optimal transfer size using the Baumol model? What is the average cash balance? .What would be the answer to (a) if the ROI were 12% per annum and the transfer costs were P75? W o they differ from those in (a)?

roblem 4 (Determination of Optimal Average Cash Balance Using Baumol Model) avpee Inc., has two dates when it receives its cash inflows (February 15 and August 15). On each of the ates, it expects to receive P30 million. Cash expenditure are expected to be steady throughout ubsequent 6-month period. Presently, the ROI in marketable securities is 8% per annum, and the cost ansfer from securities to cash isP125 each time a transfer occurs. zequired: . What is the optimal transfer size using the Baumol model? What is the average cash balance? .What would be the answer to (a) if the ROI were 12% per annum and the transfer costs were P75? W o they differ from those in (a)?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 1P

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