Irene Ent. has an average daily cash outflow of $1,000 and the cost of each transaction is
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Question:
Irene Ent. has an average daily cash outflow of $1,000 and the cost of each transaction is $25. The firm currently maintains a cash balance of $60,000 in its account. The annual interest rate on the account is 6%. Using the Baumol model,
calculate the optimal cash balance that the company should maintain. (Assume 360 days make a year)
Related Book For
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello
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