Furles Inc. has hired you as a consultant to analyze their cash management policy and suggest the most efficient parameters. They have estimated their current daily variance of net cash flow to be $$75,000.$ Their bank requires them to maintain a minimum compensating balance in their account of $$2,000.$ They have negotiated a fixed transaction cost with their broker of $$15$ per transaction and they are currently able to earn an annual return of $5\%$ on their investment in marketable securities$.$

Compute their optimal cash balance target $($C$*),$ optimal upper bound $($U$*)$ and lower bound $($L$),$ as well as the average cash balance $($ACB$)$ that they will have on hand so that you can also tell them their annual opportunity cost of maintaining the average cash balance.

C$*=$

U$*=$

L $=$

ACB $=$

Annual Opportunity Cost $($$$)=$