Question
Once a year the company A gets 2,000,000$. From this amount 700,000$ is needed for paying in cash the following year. Each time A deposits
Once a year the company A gets 2,000,000$. From this amount 700,000$ is needed for paying in cash the following year. Each time A deposits money in its account it pays 2000$ for paying expenses. If A can hold negotiable securities that yield 5% and then converts these securities in cash with cost only 2$ per deposit, what is the total cost for one year to hold the remained amount in case with the minimum cost. Calculate using Baumol model.
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Financial Accounting
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9781259105692, 978-1259103285
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