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| Teaching Since: | May 2017 |
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| Questions Answered: | 66690 |
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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
The Seminole Company wishes to apply the Miller-Orr model to manage its cash investment. Seminole’s management has collected the following estimates:
|
Cost per transaction |
= $200 |
|
Variance of daily cash flows |
= $10,000 |
|
Opportunity cost of cash, per day |
= 0.05% |
Seminole management has figured, based on their experience dealing with the cash flows of the company, that there should be a cushion— a safety stock—of cash of $20,000. Calculate the following:
a. the lower limit
b. the return point
c. the upper limit
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