What will be walnut average cash balance

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Reference no: EM132174775

Question: 1. Walnut Industries projects that annual cash usage of $3.75 million will occur uniformly throughout the forthcoming year. Walnut plans to meet these demands for cash by periodically selling marketable securities from its portfolio. The firm's marketable securities are invested to earn 5.2 percent, and the cost per transaction of converting funds to cash is $40.

A. Use the inventory model to determine the optimal transaction size for transfers from marketable securities to cash.

B. What will be Walnut's average cash balance?

C. How many transfers per year will be required?

Reference no: EM132174775

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