Question: HotFoot Shoes would like to maintain their cash account at
HotFoot Shoes would like to maintain their cash account at a minimum level of $25,000, but expect the standard deviation in net daily cash flows to be $2,000, the effective annual rate on marketable securities to be 3.5 percent per year, and the trading cost per sale or purchase of marketable securities to be $200 per transaction. What will be their optimal upper cash limit?
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