Question 3 (15 marks) (a) The Cold Fusion Corporation has established that its optimal cash balance using the BAT model is C*= N$3, 821. Its fixed cost of replenishing cash balances per transaction is N$10 and the interest rate on marketable securities is 5 percent. How much cash does the Corporation require per year? (4 marks) (b) Redan Manufacturing uses 2,500 switch assemblies per week and then reorders another 2,500. If the relevant carrying cost per switch assembly is $10, and the fixed order cost is $2,400, is Redan's inventory policy optimal? Why or why not? If it is not then determine it optimal order size. (8 marks) (c) Using Miller-Orr Slap Shot Corporation has a fixed cost associated with buying and selling marketable securities of $100. The interest rate is currently 1 percent per day, and the firm has estimated that the standard deviation of its daily net cash flows is $50. Management has set a lower limit of $1,100 on cash holdings. Describe how the system will work