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Question: 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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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92300272

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