Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out business.Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in lostproduction. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $120per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cashmanagement service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reductionin cash holdings will be used to purchase government bonds earning 5 percent, then how much moneyshould Jan's hold? a. 10,000 b.8,000 c. 6,000 d.4,000

The cash is very important in the business but cash should be at optimal levels and maintaining more…

Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out busines Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in l production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $1 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reducti n cash holdings will be used to purchase government bonds earning 5 percent, then how much money hould Jan's hold? a. 10,000 b.8,000 c. 6,000 d.4,000

Jan's Dry Cleaning holds $10,000 on a typical day, although only $2,000 is essential for carrying out busines Making a midday deposit is estimated to reduce cash holdings to $8,000 and cost an extra $80 per year in l production. If, in addition, an armored car service is engaged to pick up cash more frequently for a fee of $1 per year, cash holdings will be further reduced to $6,000 per day. Employing a computerized cash management service for an annual fee of $180 would reduce cash holdings further to $4,000. If any reducti n cash holdings will be used to purchase government bonds earning 5 percent, then how much money hould Jan's hold? a. 10,000 b.8,000 c. 6,000 d.4,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 10P

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