5. 9.

Using Miller-Orr [LO 19.2] The variance of the daily cash flows for the Pele Bicycle Shop is $890 000. The opportunity cost to the firm of holding cash is 4.1 per cent per year. What should the target cash level and the upper limit be if the tolerable lower limit has been established as $160 000? The fixed cost of buying and selling securities is $300 per transaction.