Determine the transactions demand for cash

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Reference no: EM133326511

Case: The Mapera Corporation plans to have P1 million in steady cash outlays for next year. The firm believes that it will face an opportunity interest rate of 15 percent and will incur a cost of P200 each time it borrows (or withdraws). Required: using the Baumol model

Question 1) Determine the transactions demand for cash (the optimal borrowing or withdrawal lot size) for Mapera Company

Question 2) What will be the cash cycle for the firm (in days) ?

Question 3) What will be the average cash balance for the firm?

Question 4) Compute the relevant cost of cash balance

Reference no: EM133326511

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