What will be optimal upper cash limit

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Problem 1: Hollywood Shoes would like to maintain their cash account at a minimum level of $57,000, but expect the standard deviation in net daily cash flows to be $4,700; the effective annual rate on marketable securities to be 6.50 percent per year; and the trading cost per sale or purchase of marketable securities to be $170 per transaction. What will be their optimal upper cash limit? (Round your answer to the nearest dollar amount.)

Problem 2: Suppose that a company's equity is currently selling for $26.75 per share and that there are 4.1 million shares outstanding. If the firm also has 21.0 thousand bonds outstanding, which are selling at 97.5 percent of par, what are the firm's current capital structure weights for equity and debt respectively?

Reference no: EM132616728

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