Your firm needs $68,000 a week to pay bills. The standard deviation of the weekly disbursements is $9,500. The firm has established a lower cash balance limit of $40,000. The applicable interest rate is 6 % and the fixed cost of transferring funds is $20. What is the optimal initial cash balance?
A) $34,332
B) $36,009
C) $43,908
D) $47,117
E) $48,552
Correct Answer:
Verified
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