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Dear Sir would you please help me this question.
WWW Co is a subsidiary of BB Co. WW Co requires $ 10m in finance to be easily spread over the coming year, which BB ltd will supply, Research shows:
there is a standing bank fee of $200 for each drawdown.
the interest cost of holding cash (ie finance cost less deposit interest) is 6% pa.
how much should WW Co draw down at a time ? ( nearest $000)
A $8,000
B $67,000
C $258,000
D $26,000
MAY THANKSYou must have an answer in the same book in which you found the question (otherwise you should be using a different book!!)!
You should use this forum to ask about anything you do not understand in the answer and not simply expect an answer.You use the formula, with annual cash required of $10M; cost of ordering cash of $200; and net interest cost of 6%.
I assume that you have watched my free lecture on this?
(Our lectures are a complete course for Paper F9 and cover everything needed to be able to pass the exam well)thank you, I did a mistake in calculation, what I use is 10,000 instead of 10,000,000, so I got it .
many thanks
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