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ABC Ltd. makes cash payments of $10,000 per week. The interest rate on marketable securities is 12% and every time the company sells marketable securities,
ABC Ltd. makes cash payments of $10,000 per week. The interest rate on marketable securities is 12% and every time the company sells marketable securities, it incurs a cost of $20. Required a) Determine the optimal amount of marketable securities to be converted into cash every time the company makes the transfer. b) Determine the total number of transfers from marketable securities to cash per year. c) Determine the total cost of maintaining the cash balance per year. d) Determine the firm's average cash balance. ABC Ltd. makes cash payments of $10,000 per week. The interest rate on marketable securities is 12% and every time the company sells marketable securities, it incurs a cost of $20. Required a) Determine the optimal amount of marketable securities to be converted into cash every time the company makes the transfer. b) Determine the total number of transfers from marketable securities to cash per year. c) Determine the total cost of maintaining the cash balance per year. d) Determine the firm's average cash balance
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