Hi My Dear Tutor, there is a specific part in the question mentioning "Widnor Co has a cost of short-term finance of 5% per year".
i think it is the same thing which mentioned in Baumol cash model formula like "the cost of interest"=interest on short term accounts minus the interest of investment funding"
it looks like interest on short term accounts will be interest saving or received but its difference will be interest cost?
Did i get it right?
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Friday 5 June 2015 past exam paper question 3
7y ago#1I do not understand why you are asking this, because the Baumol model is of no relevance in this question.
If it was a question on Baumol that you would need to know the interest earned on short-term deposits.
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