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Calculate the conversion cost, and the total cost

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Question - Given the following information, calculate the target cash balance using the Baumol model (4 Points).

Annual interest rate 12%

Fixed order cost $100

Total cash needed $240,000

Calculate the target cash balance?

Calculate the opportunity cost of holding cash?

Calculate the conversion cost, and the total cost?

What would be the opportunity, conversion and total cost if target cash balance $15,000 were held instead?

Reference no: EM132531643

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