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7. Company A projects cash outflows to exceed inflows by $2 million over 4 months. If its opportunity cost for investment of cash is 3%
7. Company A projects cash outflows to exceed inflows by $2 million over 4 months. If its opportunity cost for investment of cash is 3% (effective annual rate of line of credit) and the fixed cost of obtaining cash is $50 per transaction. a. What is the optimal transaction size for transfer of money into the cash account?b. What is the maximum balance and reorder point in the company's checking account during the quarter?
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