In order to manage GOLs cash flow more effectively, the CFO has expressed interest in using the Miller-Orr model. GOL invests its surplus cash at an annual rate of 7.5% and incurs R150 per transaction on buying and selling short-term securities. The expected daily cash balances and their probability distributions are as follows:

Cash (R)		Probability
80 000		15%
90 000		40%
100 000			45%

The acceptable lower limit of cash holding is R20 000.

Based on managements forecast and using the Miller-Orr Model, calculate the target cash level GOL should hold in order to allow for effective management of their cash flows. Below is the formula for Miller-Orr:

Optimal return point = (33 x cost per order x variance of daily cash balances)/(4 x daily interest rate on marketable securities) + Lower cash limit