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XYZ Ltd has an average cash balance of sh. 2,000. Total cash needed for the year is sh. 200,000. The interest rate is 5% p.a.

XYZ Ltd has an average cash balance of sh. 2,000. Total cash needed for the year is sh. 200,000. The interest rate is 5% p.a. and the costs of replenishing the cash is sh. 80 each time. Calculate: a) The opportunity costs b) Transaction costs c) Total costs d) Comment on the companys cash management strategy

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