Question: The Timberline firm expects a total need of $12,500 over the next three months. They have a beginning cash balance of 1,500 dollar, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is 3.50 dollar. The interest rate on marketable securities is 8% per annum. There is a steady rate of cash disbursement & no cash receipts during the month.
[A] Based on the company current practice, calculate the average daily cash balance [a month has 30 days]?
[A] $94.44
[B] $138.89
[C] $50.00
[D] $69.44
[E] None of the above
[B] Calculate the total fixed order cost for the next three months based on the firm's current practice?
[A] $55.60
[B] $75.60
[C] $29.17
[D] $37.80
[E] None of the above