Cash Balance and the BAT Model

This question has five parts.

1. Given the following information, calculate the target cash balance using the BAT model.
   Annual interest rate: 15%
   Fixed order cost: $180
   Total cash needed: $410,000
2. What is the opportunity cost of holding cash?
3. What is the trading cost?
4. What is the total cost?
5. What would be the opportunity cost of holding cash, the trading cost, and the total cost if you were holding $19,000 in cash?

Answer rating: 100% (QA)

To calculate the target cash balance using the BAT model First determine the opportunity cost of hol... View the full answer