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If a Firm Has Achieved Its Target Cash Balance the Net

Question 7

Multiple Choice

If a firm has achieved its target cash balance the net present value is:


A) positive because the cash balance is positive.
B) zero because increasing the cash balance increases the interest cost.
C) negative because the cash balance has a financing cost.
D) positive because decreasing the cash decreases the cost of illiquidity.
E) None of these.

Correct Answer:

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