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a co faces a constant demand for cash totalling 200,000 pa. it replenishes its current account (which pays no interest) by selling constant amounts of treasury bills which are held as an investment.earning 6% pa. cost per sale of t bills is a foxed $15 per sale
what is the optimal amount of t bills to be sold?
the answer says:
d=200,000
Co=15
Ch= 0.06i dont understand y Ch =0.06?
regards
Because 6% is what it is costing them to take money from the investments (they are losing 6% interest) and 0.06 is the same as 6%.
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