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Assume that HK intends to keep its cash balance at 2.5% of the year's projected sales and it is charged 8% interest by its bank

Assume that HK intends to keep its cash balance at 2.5% of the year's projected sales and it is charged 8% interest by its bank on its revolving line of credit. How much will the available incremental cash increase by in the first year, and how will it benefit the firm if it isn't being retained as cash? Use calculations to quantify and support your answer.

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