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BUSINESS FINANCE I Dersi Working Capital Management soru cevapları
BUSINESS FINANCE I Dersi Working Capital Management soru detayı:
SORU:
What are the assumptions in Baumol's Economic order quantity model (EQQ)?
CEVAP: The Baumol model is based on the following assumptions:
- The cash is used evenly over a period of time.
- The cash requirements of the firm are known with certainty in advance.
- The transaction cost is known and isconstant.
- By holding the cash balances, the firm would incur the opportunity cost of interest forgone by not investing in marketable securities. The rate of carrying cost is known and is assumed to be constant.
- The short term marketable securities can be freely bought and sold.
The Baumol model is based on the following assumptions:
- The cash is used evenly over a period of time.
- The cash requirements of the firm are known with certainty in advance.
- The transaction cost is known and isconstant.
- By holding the cash balances, the firm would incur the opportunity cost of interest forgone by not investing in marketable securities. The rate of carrying cost is known and is assumed to be constant.
- The short term marketable securities can be freely bought and sold.