Question: Cash Balance and the BAT Model This question has five parts. Given the following information, calculate the target cash balance using the BAT model. Annual

Cash Balance and the BAT Model

This question has five parts.

  1. Given the following information, calculate the target cash balance using the BAT model.
    Annual interest rate: 15%
    Fixed order cost: $180
    Total cash needed: $410,000
  2. What is the opportunity cost of holding cash?
  3. What is the trading cost?
  4. What is the total cost?
  5. What would be the opportunity cost of holding cash, the trading cost, and the total cost if you were holding $19,000 in cash?

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