Answer the given problems. Use 360 days in a year. Problem A: Baumol Model ABC Corporation would like to know what is its optimal cash balance for a disbursement account. The daily average disbursement is P40,000. Cost to transfer money into the account average P500 each time. If the money is not in this account, it could have been kept in a mutual fund account that would let ABC earn 3% per year. Required: 1. Optimum cash balance 2. Total cost of holding and maintaining the optimal cash balance

Answer the given problems. Use 360 days in a year. Problem A: Baumol Model ABC Corporation would like to know what is its optimal cash balance for a disbursement account. The daily average disbursement is P40,000. Cost to transfer money into the account average P500 each time. If the money is not in this account, it could have been kept in a mutual fund account that would let ABC earn 3% per year. Required: 1. Optimum cash balance 2. Total cost of holding and maintaining the optimal cash balance

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4EA: Assume a company is going to make an investment of $450,000 in a machine and the following are the...

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