Lisa Tylor, CFO of Purple Rain Co., concluded from the Baumol model that the optimal cash balance

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Lisa Tylor, CFO of Purple Rain Co., concluded from the Baumol model that the optimal cash balance for the firm is $10 million. The annual interest rate on marketable securities is 5.8 per cent. The fixed cost of selling securities to replenish cash is $5,000.

Purple Rain’s cash flow pattern is well approximated by the Baumol model. What can you infer about Purple Rain’s average weekly cash disbursement?

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Corporate Finance

ISBN: 9780077173630

3rd Edition

Authors: David Hillier, Stephen A. Ross, Randolph W. Westerfield, Bradford D. Jordan, Jeffrey F. Jaffe

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Question Posted: Feb 22, 2024 03:02 AM

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Lisa Tylor, CFO of Purple Rain Co., concluded from the Baumol model that the optimal cash balance

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Answer To find the average weekly cash disbursement using the Baumol model well use the form...View the full answer

Corporate Finance

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