1)The Konso Company wishes to apply the Miller-Orr model to manage its cash investment. Konso's management has collected the following estimates:

Cost per transaction = $200

Variance of daily cash flows = $10,000

Opportunity cost of cash, per month = 1.5%

Konso management has figured, based on their experience dealing with the cash flows of the company, that there should be a cushion a safety stock (minimum)of cash of $20,000.

Required: Calculate

a)the lower limit

b)the upper limit

c)Return point