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4-1. A firm has periodic cash inflows and steady cash outflows and wants to use the Baumol model to formulate a strategy for the temporary

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4-1. A firm has periodic cash inflows and steady cash outflows and wants to use the Baumol model to formulate a strategy for the temporary investment of some of its cash. The firm receives an inflow of cash every 15 days (use a 360-day year). The yield on invested cash is 12 percent per year. It costs $500 to invest or disinvest, and the portion of the next cash inflow that will be retained to pay bills. over the following 15 days is $3.2 million. Calculate: a. The optimal number of transactions. b. The amount of the initial investment. c. The amount of the periodic withdrawals. d. The net profit from this strategy

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