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Given the following information, calculate the target cash balance using the BAT model: Annual interest rate 6% Fixed order cost $25 Total cash
Given the following information, calculate the target cash balance using the BAT model: Annual interest rate 6% Fixed order cost $25 Total cash needed $8500How do you interpret your answer? Indicate the likely impact of each of the following on a company's target cash balance. Use the letter I to denote an increase and D to denote a decrease. Briefly explain your reasoning in each case: a) commissions charged by brokers decrease b) interest rates paid on money market securities rise c) the compensating balance requirement of a bank is raised d) the firm's credit rating improves e) the cost of borrowing increases f) driect fees for banking services are established.
