**Re: Baumol's model of cash mgt - **
June 28th, 2015
**Equational Representations in Baumol Model of Cash Management:**
Holding Cost = k(C/2)
Transaction Cost = c(T/C)
Total Cost = k(C/2) + c(T/C)
Where T is the total fund requirement, C is the cash balance, k is the opportunity cost & c is the cost per transaction. |