What is the average daily cash balance

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Reference no: EM131020199

The Smythe firm expects a total cash need of $9,000 over the next 4 months. The have a begin inning cash balance of $1,000 and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is $4.00. 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 $20.00

B. $45.25

C.54.17

D. $ 69.48

E. None of these

Reference no: EM131020199

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