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Problem:

HotFoot Shoes would like to maintain their cash account at a minimum level of $31,000, but expect the standard deviation in net daily cash flows to be $2,000; the effective annual rate on marketable securities to be 5 percent per year; and the trading cost per sale or purchase of marketable securities to be $180 per transaction.

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Question: What will be their optimal cash return point?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170152

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