5. The following are the given cost of liquidity and illiquidity for different ratios of current assets
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5. The following are the given cost of liquidity and illiquidity for different ratios of current assets to fixed assets of a firm. Determine the optimum ratio of current assets to fixed assets. Also show your answer on a graph. CA/FA Cost of Liquidity Cost of Liquidity 0.10 138,000 2,200,000 0.25 275,000 1,650,000 0.40 550,000 1,100,000 0.70 1,100,000 830,000 1.00 2,200,000 690,000 1.50 4.140,000 550,000 2.50 6,890,000 276,000
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