A firm maintains a separate account for cash disbursements. Total disbursements are $100,000 per month, spread evenly
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A firm maintains a separate account for cash disbursements. Total disbursements are $100,000 per month, spread evenly over the month. Administrative and transaction costs of transferring cash to the disbursement account are $10 per transfer. Marketable securities yield 1 percent per month. Determine the size and number of transfers that will minimize the cost of maintaining the special account.
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Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
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