Exercise 3.4 A company will face the following cash requirements in the next eight quarters (positive entries represent cash needs while negative entries represent cash surpluses): Q1 Q2 Q3 Q4 Q5 Q6 Q7 100 500 100 -600-500 200 600 The company has three borrowing possibilities. Q8 -900 A 2-year loan available at the beginning of Q1, with a 1% interest per quarter. • The other two borrowing opportunities are available at the beginning of every quarter: a 6-month loan with a 1.8% interest per quarter, and a quarterly loan with a 2.5% interest for the quarter. • Any surplus can be invested at a 0.5% interest per quarter. Formulate a linear program that maximizes the wealth of the company at the beginning of Q9.
Exercise 3.4 A company will face the following cash requirements in the next eight quarters (positive entries represent cash needs while negative entries represent cash surpluses): Q1 Q2 Q3 Q4 Q5 Q6 Q7 100 500 100 -600-500 200 600 The company has three borrowing possibilities. Q8 -900 A 2-year loan available at the beginning of Q1, with a 1% interest per quarter. • The other two borrowing opportunities are available at the beginning of every quarter: a 6-month loan with a 1.8% interest per quarter, and a quarterly loan with a 2.5% interest for the quarter. • Any surplus can be invested at a 0.5% interest per quarter. Formulate a linear program that maximizes the wealth of the company at the beginning of Q9.
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 14P
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