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    Number times cash needs to be replenished

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    The Timberline firm expects a total need of $12,500 over the next 3 months. They have a beginning cash balance of $1,500, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is $3.50. The interest rate on marketable securities is 8% per annum. There is a constant rate of cash disbursement and no cash receipts during the month.

    18. Based on the firm's current practice, how many times during the next 3 months will the cash balance be replenished?

    A. 3.33 times
    B. 4.42 times
    C. 8.33 times
    D. 13.35 times
    E. None of the above.

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    Solution Summary

    The solution explains how to determine the number times cash needs to be replenished