HotFoot Shoes would like to maintain its cash account at a minimum level of $39,000, but expects the standard deviation in net daily cash flows to be $5,400, the effective annual rate on marketable securities t be 6.1 percent per year, and the trading cost per sale or purchase of marketable securities to be $160 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
HotFoot Shoes would like to maintain its cash account at a minimum level of $39,000, but expects the standard deviation in net daily cash flows to be $5,400, the effective annual rate on marketable securities t be 6.1 percent per year, and the trading cost per sale or purchase of marketable securities to be $160 per transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter23: Other Topics In Working Capital Management
Section: Chapter Questions
Problem 11MC
Related questions
Question
![HotFoot Shoes would like to maintain its cash account at a minimum level of $39,000, but expects the
standard deviation in net daily cash flows to be $5,400, the effective annual rate on marketable securities to
be 6.1 percent per year, and the trading cost per sale or purchase of marketable securities to be $160 per
transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate
calculations. Round your final answer to 2 decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F61060f4b-b23a-4ee7-a355-bc9a01c2b8eb%2F20dda260-b324-431b-b8c6-117438e914f4%2Fd72a1jy_processed.png&w=3840&q=75)
Transcribed Image Text:HotFoot Shoes would like to maintain its cash account at a minimum level of $39,000, but expects the
standard deviation in net daily cash flows to be $5,400, the effective annual rate on marketable securities to
be 6.1 percent per year, and the trading cost per sale or purchase of marketable securities to be $160 per
transaction. What will be its optimal cash return point? (Use 365 days a year. Do not round intermediate
calculations. Round your final answer to 2 decimal places.)
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT