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What is total cost for one year of holding minimum cost

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Question 1: Halliday Inc. receives a $2 million payment once a year. Of this amount, $750,000 is needed for cash payments made during the next year. Each time Halliday deposits money in its account, a charge of $6.95 is assessed to cover clerical costs. If Halliday can hold marketable securities that yield 4%, and then convert these securities to cash at a cost of only the $6.95 deposit charge, what is the total cost for one year of holding the minimum cost cash balance according to the Baumol model?

Reference no: EM132555732

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