Determine the minimum total cost associated

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Question: The Capone Company has determined that its operating circumstances are quite suitable for use of the Baumol Cash Management Model. The company consistently earns a five percent annual rate of return on its marketable securities and requires a total of $200,000 in cash each year to maintain its production. Transactions costs are $50 each time Capone liquidates marketable securities. Determine the following for the Capone Company: a) its optimum cash order quantity 2 b) its optimum average cash balance c) the optimum number of securities liquidations for cash per year d) the optimum number of days between orders for cash e) its total annual transactions cost incurred by using the optimum cash order quantity f) its annual foregone returns cost g) the minimum total cost associated with obtaining and maintaining cash balances

Reference no: EM133542101

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