A retail firm has sales of $150 million and inventory of $30 million. The firm has an after-tax operating margin of 10%, expects revenues and lush-flows to grow 5% in the long term and has a cost of capital of 10%. Although this rm has traditionally maintained inventory at 20% ofsalee, it is considering lowering inventories to 15% of sales. Although this will provide a benet in terms of cashow, it is anticipated that revenues will immediately drop by 2% and that expected growth will be 435% instead of 5%. Estimate the optimal cash balance bythe Baumol Model for an automobile supplies firm that has the following characteristics: I The annual cash usage rate for the rm is $10 million I The cost per sale of securities is $50 million I The annual interest rate is 10% 10 Estimate the optimai cash balance for a computer software rm with uncertain cash flows- The firm has the following characteristics: I The standard deviation in daily cash balances is $10,000; the variance is $100 million. The minimum lush balance this rm has to maintain is $100,000. The interest rate, on a daily basis, is 0.01913 The transaction costfor each sale or purchase of securities is $50 it t 1 3M Co. buys a 100day treasury bill with a face value of $100,000 and pays only $0?,500. Determine the "r'ield on Bani: Disccunt and the Return on Treasury Bill. | l A dealer with $50 million in treasury bill approach a corporation with excess funds to invest The dealer will offer to sell the treasury bill to the corporation for $40.00 million and buy baclr two days later at $50 million. Determine the repo rate and the return on repurchase agreement