Penny Pinchers Inc

question 92

Essay

Penny Pinchers Inc.is attempting to implement a Baumol model for cash management.Given that Treasury bills offer a 7.5 percent return, that each sale of bills involves a fixed cost of $30, and that Pinchers disburses $6.5 million annually, determine the optimum amount of bills to sell each time.What will be the average cash balance under these assumptions?

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Definitions:

Behavior

The actions or reactions of an individual, often in relation to the environment or stimuli.

Convergence

The inward movement of the eyes as they focus on an object that is drawing nearer.

Visual Accommodation

The process by which the eye changes optical power to maintain a clear image or focus on an object as its distance changes.

Neonates

Newborn babies, especially those less than one month old.