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Problem regarding the baumol model

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Reference no: EM131318217

For Leo, Inc. and according to the Baumol model, what is Leo's Inc. average cash balance if the total cash needed for transactions annually is $7,569,000 and the company can hold marketable securities that yield 10 percent, and then convert these securities to cash at a cost of only $50 per transaction.

A. $35,356
B. $43,500
C. $20,157
D. $72,711
E. $48,918

Reference no: EM131318217

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