Happy Feet Would Like to Maintain Their Cash Account at a Minimum

question 122

Multiple Choice

Happy Feet would like to maintain their cash account at a minimum level of $75,000, but expects the standard deviation in net daily cash flows to be $5,000, the effective annual rate on marketable securities to be 7 percent per year, and the trading cost per sale or purchase of marketable securities to be $150 per transaction. What will be their optimal cash return point?

• A) $80,000.00
• B) $99,755.64
• C) $76,593.42
• D) $82,548.18

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