(Answered) Cash balance based on the Miller-Orr model

Finance

Problem: The Burger Stop spends 52,000 a week to pay bills and maintains a lower cash balance limit of 60,000. The standard deviation of the disbursements is 7,500. The applicable weekly interest rate is 0.04 percent and the fixed cost of transferring funds is 50.

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Question: What is your optimal average cash balance based on the Miller-Orr model? Please explain your answer and also provide examples

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