A company spends on average €75,000 per week to pay its bills and maintains a lower cash balance limit of €40,000. The applicable interest rate is 6.12 percent and the fixed cost of transferring funds is €32. What is the optimal initial cash balance based on the BAT model

A company spends on average €75,000 per week to pay its bills and maintains a lower cash balance limit of €40,000. The applicable interest rate is 6.12 percent and the fixed cost of transferring funds is €32. What is the optimal initial cash balance based on the BAT model

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 16EB: Project Y cost $8,000 and will generate net cash inflows of $1,500 in year one, $2,000 in year two,...

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

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