The assistant treasurer of Monroe Tires. INC is trying to determine what the apporiate cash return level should be. The company's cash balances have been fluctuating widly because of unpredictable and wide-ranging receits and disburements. The best estimate of annual discursements is 5,000,000. The investment broker charges 75$ per securites transaction. Short-term invesment interest rates are 12%. The company does not mind a 0$ cash balance but does not want the balance to be negative.

a.) What the cash return level be, according to the Baumol Model?

B) What will the average cash balance be if the company's cash outflows fit the assumptions of the Baumol Model?

C) How many security sales will Monroe have in a year, assuming the model's assumptioms are valid?

D) WHAT will the total period costs be for a year?

C) Do you recommend that monroe uses the baumol model? why or why not?