Batangas Company estimates its total cash outlays at $160 million during the coming year. The company normally spends $30 to transfer cash from marketable securities to cash in bank and vice versa. The marketable securities portfolio currently earns 4% annual rate of return. Requirements: 1. Optimal transaction size. 2. Average cash balance. 3. Total annual cost of cash if the company adopts the optimal transaction size.

Batangas Company estimates its total cash outlays at $160 million during the coming year. The company normally spends $30 to transfer cash from marketable securities to cash in bank and vice versa. The marketable securities portfolio currently earns 4% annual rate of return. Requirements: 1. Optimal transaction size. 2. Average cash balance. 3. Total annual cost of cash if the company adopts the optimal transaction size.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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