The Eliot Co. needs $210,000 a week to pay bills. The standard deviation of the weekly disbursements is $24,000. The firm has established a lower cash balance limit of $90,000. The applicable interest rate is 4 % and the fixed cost of transferring funds is $60. Based on the BAT model, what is the optimal average cash balance?
A) $36,199
B) $61,188
C) $63,992
D) $90,499
E) $180,997
Correct Answer:
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