Pinocchio Inc. has a total annual cash requirement of P9,075,000 which are to be paid uniformly. Simile has the opportunity to invest the money at 24% per annum. The company spends, on the average, P40 for every cash conversion to marketable securities. Required: Please solve 4-7 4. How much is the total holding cost? 5. How much is the total transaction cost? 6. How much is the total cost of cash?
Pinocchio Inc. has a total annual cash requirement of P9,075,000 which are to be paid uniformly. Simile has the opportunity to invest the money at 24% per annum. The company spends, on the average, P40 for every cash conversion to marketable securities. Required: Please solve 4-7 4. How much is the total holding cost? 5. How much is the total transaction cost? 6. How much is the total cost of 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
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CASE 3
Pinocchio Inc. has a total annual cash requirement of P9,075,000 which are to be paid uniformly. Simile has the opportunity to invest the money at 24% per annum. The company spends, on the average, P40 for every cash conversion to marketable securities.
Required: Please solve 4-7
4. How much is the total holding cost?
5. How much is the total transaction cost?
6. How much is the total cost of cash?
7. What will be your advice to the management?
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