he following data applies to a company. 1. The minimum cash balance is $8,000. 2. The variance of daily cash flows is 4,000,000, equivalent to a standard deviation of $2,000 per day. 3. The transaction cost for buying or selling securities is $50. The interest rate is 0.025 per cent per day. You are required to formulate a decision rule using the Miller-Orr model. A. What is the optimal cash return point? B.What is the upper cash limit?
he following data applies to a company. 1. The minimum cash balance is $8,000. 2. The variance of daily cash flows is 4,000,000, equivalent to a standard deviation of $2,000 per day. 3. The transaction cost for buying or selling securities is $50. The interest rate is 0.025 per cent per day. You are required to formulate a decision rule using the Miller-Orr model. A. What is the optimal cash return point? B.What is the upper cash limit?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following data applies to a company.
1. The minimum cash balance is $8,000.
2. The variance of daily
3. The transaction cost for buying or selling securities is $50. The interest rate is 0.025 per cent per day.
You are required to formulate a decision rule using the Miller-Orr model.
A. What is the optimal cash return point?
B.What is the upper cash limit?
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