Watkins Resources faces a smooth annual demand for cash of $1.66 million, incurs transaction costs of $69 every time the firm sells marketable securities, and can earn 3.1 percent on its marketable securities. What will be its optimal cash replenishment level? (Enter your answer in dollars not in millions. Round your answer to 2 decimal places.) Optimal cash

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
icon
Related questions
Question
Watkins Resources faces a smooth annual demand for cash of $1.66 million, incurs transaction costs of $69 every time the firm sells
marketable securities, and can earn 3.1 percent on its marketable securities.
What will be its optimal cash replenishment level? (Enter your answer in dollars not in millions. Round your answer to 2 decimal
places.)
Optimal cash
Transcribed Image Text:Watkins Resources faces a smooth annual demand for cash of $1.66 million, incurs transaction costs of $69 every time the firm sells marketable securities, and can earn 3.1 percent on its marketable securities. What will be its optimal cash replenishment level? (Enter your answer in dollars not in millions. Round your answer to 2 decimal places.) Optimal cash
Expert Solution
steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College