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Task7-1 (6 points) ABC Company presently follows a decentralized system of cash management where it and its affiliates each maintain their own transaction and precautionary cash balances. The company believes that it and its affiliates' cash needs are normally distributed and independent from one another. It is corporate policy to maintain three standard deviations of cash as precautionary holdings. Expected Standard Affiliate Transactions Deviation U.S. 100000 37000 Canada 150000 60000 Mexico 175000 30000 Chile 200000 70000 a) Use the projected information for the current month, which is presented above (all figures in 000 US $), to determine the amount of cash ABC Company needs to hold in precautionary balances under its current decentralized system following its corporate policy to maintain three standard deviations of cash as precautionary holdings. The amount of cash ABC Company needs to hold in precautionary balances under its current decentralized system is (in 000 US $, no decimals) b) Use the projected information for the current month, which is presented above (all figures in 000 US $), to determine the amount of cash ABC Company needs to hold in precautionary balances under a centralized cash management system following the company's corporate policy to maintain three standard deviations of cash as precautionary holdings. The amount of cash ABC Company needs to hold in precautionary balances under a centralized system is (in 000 US $, no decimals) Task7-1 (6 points) ABC Company presently follows a decentralized system of cash management where it and its affiliates each maintain their own transaction and precautionary cash balances. The company believes that it and its affiliates' cash needs are normally distributed and independent from one another. It is corporate policy to maintain three standard deviations of cash as precautionary holdings. Expected Standard Affiliate Transactions Deviation U.S. 100000 37000 Canada 150000 60000 Mexico 175000 30000 Chile 200000 70000 a) Use the projected information for the current month, which is presented above (all figures in 000 US $), to determine the amount of cash ABC Company needs to hold in precautionary balances under its current decentralized system following its corporate policy to maintain three standard deviations of cash as precautionary holdings. The amount of cash ABC Company needs to hold in precautionary balances under its current decentralized system is (in 000 US $, no decimals) b) Use the projected information for the current month, which is presented above (all figures in 000 US $), to determine the amount of cash ABC Company needs to hold in precautionary balances under a centralized cash management system following the company's corporate policy to maintain three standard deviations of cash as precautionary holdings. The amount of cash ABC Company needs to hold in precautionary balances under a centralized system is (in 000 US $, no decimals)

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