Question: Optimization in Finance 3 - Consider the following short-term financing problem of a corporation. The treasury deparment determined the company's net cash flow as described

Optimization in Finance

3 - Consider the following short-term financing problem of a corporation. The treasury deparment determined the company's net cash flow as described in the table below: Month Jul 2013 Aug 2013 Sep 2013 Oct 2013 Nov 2013 Dec 2013 NCF -250 -50 225 -175 150 400 Notes: In thousands of dollars. NCF = Net Cash Flow The company has two methods to conduct short-term financing. It can borrow up to $100k monthly at a 0.5% interest rate per month. It can also issue a 3- month zero-coupon bond at 1.5% for a three month period. Any available cash at the end of each month can earn 0.2% interest rate per month. A. For each month, find the amount of borrowing between the two instruments that maximizes the total amount of cash available in December 2013. B. What is the optimal amount of cash on Dec 2013? C. Interpret the results and develop a storyline implied by the LP solution

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