The Timberline firm expects a total need of €12,500 over the next 3 months.They have a beginning cash balance of €1,500, and cash is replenished when it hits zero.The fixed cost of selling
Securities to replenish cash balances is €3.50.The interest rate on marketable securities is 8% per
Annum.There is a constant rate of cash disbursement and no cash receipts during the month.
Based on the firm's current practice, what is the average daily cash balance (a month has 30 days) ?
A) €50.00
B) €69.44
C) €94.44
D) €138.89
E) None of the above.
Correct Answer:
Verified
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