A firm is currently holding 800000 in cash. it assignments, Ask an Expert

Management Studies

A firm is currently holding $800,000 in cash. It assignments that over the next year its cash outflows will exceed its cash inflows through $345,500 every month. Each time securities are bought or sold through a broker, the company pays a fee of
$500. The annual interest rate on money-market securities is 7 percent.

a. How much cash should be retained and how much should be used to increase the company's holdings of marketable securities?

b. After the initial investment of excess cash, how many times during the next 12 months will securities be sold?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9313468

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