Question: Use the data from problem 15, PRI's financial managers have not been following the Baumol Model. Instead, they have been transferring cash from marketable securities
Use the data from problem 15, PRI's financial managers have not been following the Baumol Model. Instead, they have been transferring cash from marketable securities less frequently, namely, transferring cash every 4 weeks. What total cash cost including holding costs and transactions costs could PRI save by transferring the optimal cash amount Crather than this larger transfer amount? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box Question 15 4F Paradise Retailers, Inc. (PRI) determined that $1,500,000 is needed for cash transactions made during the next year. Each time PRI deposits money in its checking account, a charge of $12.95 is assessed to cover clerical costs. If PRI can hold marketable securities that yield 4.5%, and then convert these kecurities to cash at a cost of only the $12.95 deposit charge, what is the optimal cash amount C'to transfer from marketable securities to the checking account according to the Baumol Model? Enter your answer rounded to two decimal places. Do not enter Sor comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box. 29,382.53 Question Question 16 Use the data from problem 15. PRI's financial managers have not been following the Baumol Model. Instead, they have been transferring cash from marketable securities less frequently, namely, transferring cash every 4 weeks. What total cash cost including holding transactions costs could PRI save by transferring the optimal cash amount Crather than this larger im rounded to two decimal places. Do not enter or comma in the answer bo 12300 46 in the answer box 4 pts
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
