Optimal Cash Level Calculator (Baumol's Model)
This calculator uses Baumol's model of cash management to compute a company's optimal level of cash, given the fixed cash transaction cost, the total cash required for the period, and the periodic interest rate.
Please enter the necessary parameter values, and then click 'Calculate'.
- Baumol's model is commonly used to compute the optimal level of cash that a company should withdraw or borrow at a time. Its objective is to simultaneously minimize cash transaction costs and the opportunity cost of holding cash.