Wyatt Widgets has an expected cash flow of $4,500,000 and the standard deviation of the cash flow is $2,700,000. Wyatt Widgets also has available cash and short-term investments of $750,000. The treasurer wants to determine the proper size for the firm's credit line. Seth, the firm's treasurer, would like to set the size of the credit line so that the probability of illiquidity is 1.0%, which corresponds to a lambda of 2.33. Calculate the size of the needed credit line. $1,041,000 $3,890,000 $648,000 $2,700,000

Wyatt Widgets has an expected cash flow of $4,500,000 and the standard deviation of the cash flow is $2,700,000. Wyatt Widgets also has available cash and short-term investments of $750,000. The treasurer wants to determine the proper size for the firm's credit line. Seth, the firm's treasurer, would like to set the size of the credit line so that the probability of illiquidity is 1.0%, which corresponds to a lambda of 2.33. Calculate the size of the needed credit line. $1,041,000 $3,890,000 $648,000 $2,700,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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