Optimal average cash balance based on the Miller-Orr model

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Reference no: EM131880765

1. You want to buy a new car today for $15,000. the finance office at a dealership quotes you 12% annual rate on a 24 month loan. what is your monthly car payment? show all work

2. Dividends per share of a company are expected to be $3, $5, and $4 for the next three years. Thereafter, the trend rate of growth is forecast to be 10% annually. To obtain a return of 15%, an investor would be willing to pay approximately $______ for the stock.

3. Donaldson,Inc. spends $1116,000 a week to pay billsand maintains a lower cash balance of limit of $35000.The standard deviation of disbursements is $9000. The applicable weekly interest rate is 0.05% and the fixed cost of transferring funds is $12. What is your optimal average cash balance based on the Miller-Orr model?

a. 48,333.33

b. 50119.05

c. 42623.33

d. 46334.09

e. 47108.16

Reference no: EM131880765

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