Cash management model exercise 1. ABC Ltd., expects to need a total of 2m over the coming year. The interest rate is 10% and the fixed cost of a security transaction is 150. Using an appropriate cash management model, determine:

(i) ABC's optimal cash balance;

(ii) The number of transfers that will be required over the next year;

(iii) How often the cash balances will require replenishing?

(iv) The opportunity costs, trading costs and total costs.