12. Humphrey's Housing has been practicing cash management for some time by using the Baumol model for determining cash balances. Some time ago, the model called for an average balance (C*/2) of $500; at that time, the rate on marketable securities was 3 percent. A rapid increase in interest rates has driven the interest rate up to 4.35 percent. What is the appropriate average cash balance now? a. $200 b. $333 c. $415 d. $500 e. $666 13. Gemini Inc.'s optimal cash transfer amount, using the Baumol model, is $60,000. The firm's fixed cost per cash transfer of marketable securities to cash is $220, and the total cash needed for transactions annually is $990,000. On what opportunity cost of holding cash was this analysis based? a. 19.2% b. 10.4% c. 6.3% d. 12.1% e. 9.6%