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Stewart Company has cost of capital 14%. The following function represents the shortage cost for its net working capital S = 3/(x - 9) for
Stewart Company has cost of capital 14%. The following function represents the shortage cost for its net working capital
S = 3/(x - 9) for x > 9
Here S is the shortage cost in thousands of dollars, and x is the level of the net working capital, also in thousands of dollars. Find the following:
(A) The optimum level of net working capital.
(B) The financing cost, shortage cost, and total cost at the optimal point.
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