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Champions Inc. consumes cash at a rate of $ 1 , 0 0 0 per day. Each time they sell securities for cash it costs
Champions Inc. consumes cash at a rate of $ per day. Each time they sell securities for cash it costs them $ The interest rate is According to the EOQ model, they determine that the optimal amount of cash they should obtain each time they need it is $ Now suppose that two things change. First, interest rates decrease. Second, Champion's bank increases the cost of turning securities into cash. However, they continue, as before, to consume cash at a rate of $ per day. Given this new information, what would you expect to happen to the firm's EOQ?
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