Question: Union Company is examining its operating cash management One of
Union Company is examining its operating cash management. One of the options the firm is considering is a zero-balance account (ZBA). The firm’s bank is offering a ZBA with monthly charges of $1,500, and the bank estimates that the firm can expect to earn 8% on its short-term investments. Determine the minimum average cash balance that would make this ZBA a benefit to the firm. Assume a 365-day year.
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