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Why companies hold casn? Explain the properties of Baumol model (i.e. inventory prodel) and Miller-Orr model (i.e. stochastic model) for management of cash. Please determine
Why companies hold casn? Explain the properties of Baumol model (i.e. inventory prodel) and Miller-Orr model (i.e. stochastic model) for management of cash. Please determine the optimal/acceptable level of cash on the basis of financial data given below. 1.Let suppose, XYZ company plans to have $4 million in steady cash outlays for next year. Company believes that it will face an opportunity interest rate of 12% and will incur a cost of $25 each time to convert marketable seattrities into cash. (Do not forget to compute total number of conversions, average balance of cash, and total cost)
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