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What the cost of permanently maintaining

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Problem 1: Capital One has no debt, and maintains a policy of holding $50 million in excess cash reserves, invested in risk free treasury securities currently yielding 4%. If the firm is in the 40% marginal tax bracket, the cost of permanently maintaining this $50 million reserve is closest to:

A) $0.8 million
B) $1.2 million
C) $20.0 million
D) $30.0 million

Reference no: EM132735820

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