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

question 20

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.What will be the total cost to Duckett of maintaining the optimal average cash balance,as determined by the Baumol model?

• A)$35,356
• B)$7,071
• C)$18,493
• D)$70,711
• E)$53,190

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