1. Makmak Corporation uses the Baumol Cash Management Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total P432,000. The interest rate on marketable securities is 5% and P8 is the cost per transaction. What is the optimal Cash Balance of the company? 2. If Hot Tubs Inc. had annual credit sales of P2,027,773 and its days sales outstanding was equal to 35 days, what was its average A/R outstanding? (Use a 365-day year.)

1. Makmak Corporation uses the Baumol Cash Management Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total P432,000. The interest rate on marketable securities is 5% and P8 is the cost per transaction. What is the optimal Cash Balance of the company? 2. If Hot Tubs Inc. had annual credit sales of P2,027,773 and its days sales outstanding was equal to 35 days, what was its average A/R outstanding? (Use a 365-day year.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter22: Providing And Obtaining Credit

Section: Chapter Questions

Problem 2MC

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10. Makmak Corporation uses the Baumol Cash Management Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total P432,000. The interest rate on marketable securities is P8 per transaction. What is the optimal Cash Balance of the company? A. P1,175.76 C. P11,757.55 B. P5,878.78 D. P142,000
mekmek Corporation uses the Baumol Cash Model to determine its optimal cash balance. For the coming year, the expected cash disbursement total to P432,000. The interest rate on marketable securities is P8 per transaction. Using 5% carrying cost rate, what is the optimal cash balance of the company? A. 1,175.76 B. 5,878.78 C. 11,757.55 D. 142,000
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