BPP Q33 Louieed (March/June 16)

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November 11, 2018 at 8:13 pm #484528
davidlemonhhl
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Hello sir,

In the last few lines of the case the question said ‘…that the return on cash surpluses is 5% pre-tax’.

What does it mean by ‘return on cash surpluses’?

Thanks.
November 11, 2018 at 8:40 pm #484533
John Moffat
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It means that they are earning interest of 5% on any cash balances (and if they use the cash then they will be losing interest of 5%).
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