Exhibit 23.1 The Duckett Group Is Trying to Determine Its Optimal Average

question 26

Multiple Choice

Exhibit 23.1
The Duckett Group is trying to determine its optimal average cash balance. The firm has determined that it will need $5,000,000 net new cash during the coming year. The fixed transaction cost of converting securities to cash is $50, and the firm earns 10 percent on its marketable securities investments.
-Refer to Exhibit 23.1.According to the Baumol model,what is the optimal transaction size for transfers from marketable securities to cash?

• A)$7,071
• B)$38,357
• C)$70,711
• D)$102,956
• E)$87,000

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Definitions:

Erythrocytes

Red blood cells, which are responsible for carrying oxygen throughout the body.

Connective Tissue Matrix

The extracellular part of connective tissue, consisting of fibers (like collagen and elastin) and ground substance that provides support and binds tissues together.

Ground Substance

The amorphous gel-like substance in the extracellular matrix that provides support and binds cells together.

Leukocytes

White blood cells that are part of the immune system, responsible for defending the body against infectious disease and foreign materials.