Picard Industries Requires $250,000 a Week to Pay Its Bills

question 169

Multiple Choice

Picard Industries requires $250,000 a week to pay its bills. The fixed cost of transferring money is $65 per transfer. The standard deviation of the weekly cash flows is $25,000 and the lower cash balance limit is $40,000. Assume the applicable annual interest rate is 5% for the BAT model, and the applicable weekly interest rate is 0.1% for the Miller-Orr model.

Using the BAT model, what is the optimum initial cash balance?

• A) $91,924
• B) $97,735
• C) $183,848
• D) $195,470
• E) $367,696

Distinguish between different measures of central tendency (mean, median, mode).

Analyze frequency distribution tables to compute mean.

Interpret data to identify the modal value in different contexts.

Understand the concept of the 'balancing point' in the context of mean.

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Definitions:

Central Nervous System

The brain and spinal cord.

Nerve Fibers

Long extensions of neurons that transmit electrical signals between the brain and other parts of the body.

Ganglion

A structure containing a number of nerve cell bodies, typically linked by synapses, and often forming a swelling on a nerve fibre.

Adrenal Gland

Small glands located on top of each kidney that produce hormones such as adrenaline and cortisol, which are essential for stress response and metabolism.