The variance of the daily net cash flows for Black Pearl is P1.44M. The opportunity for the firm of holding cash is 8% percent per annum or equivalent to 0.0211% per day. The fixed cost of buying and selling securities is P600 per transaction. The management determined that cash should not fall below P20,000. Given these information, determine the following:a. Cash return point.b. Upper Limitc. Assuming that on a particular period, Black pearl’s cash balance is P150,000, how much of this amount is to be invested?
The variance of the daily net cash flows for Black Pearl is P1.44M. The opportunity for the firm of holding cash is 8% percent per annum or equivalent to 0.0211% per day. The fixed cost of buying and selling securities is P600 per transaction. The management determined that cash should not fall below P20,000. Given these information, determine the following:a. Cash return point.b. Upper Limitc. Assuming that on a particular period, Black pearl’s cash balance is P150,000, how much of this amount is to be invested?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The variance of the daily net cash flows for Black Pearl is P1.44M. The opportunity for the firm of holding cash is 8% percent per annum or equivalent to 0.0211% per day. The fixed cost of buying and selling securities is P600 per transaction. The management determined that cash should not fall below P20,000. Given these information, determine the following:a. Cash return point.b. Upper Limitc. Assuming that on a particular period, Black pearl’s cash balance is P150,000, how much of this amount is to be invested?
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