Your corporate financial manager has decided to liquidate securities to provide for cash needs in units of $50,000.Is that amount of cash consistent with annual cash needs of $2,500,000, costs per sale of $30, and annual T-bill rate of 6 percent?

Question

Quizplus · Accepted Answer

To determine if the amount is appropriate, we calculate the cost of liquidating securities to meet the annual cash needs. Given an annual cash need of $2,500,000 and a cost per sale of $30, we can calculate the number of sales needed and the total cost of these sales. The T-bill rate is not directly relevant for calculating the appropriateness of the liquidation amount. The question is whether liquidating in units of $50,000 is efficient for covering the $2,500,000 annual need, considering the cost per sale. Without needing to delve into detailed calculations, the choice of $50,000 units does not inherently conflict with the given parameters, suggesting it could be a reasonable approach for managing liquidity needs.

Your Corporate Financial Manager Has Decided to Liquidate Securities to Provide