QUESTION 2 (20 Marks) 2.1. Study the information provided below and answer the following question. INFORMATION DBV Inc. offers its customers 30 days credit but, at present, customers are taking an average of 40 days credit. In order to speed up cash collection, the company is considering introducing a 1% discount for payment within 10 days. The company finances its working capital requirement using an overdraft at an annual cost of 9%. Required: Calculate the annual cost of offering the discount and evaluate whether or not the discount should be offered. (4 marks) 2.2.Use the information provided below to answer the following questions. INFORMATION During the financial year ended 31 December 2022, the total annual demand for cash at Edgemead Limited (Edgemead) amounted to R5 000 000 and the fixed cost of converting marketable securities into cash and vice versa was R100 per order. Edgemead adhered to a policy of withdrawing exactly R1 000 000 cash at a time and the interest rate on short-term marketable securities was 10% per annum. Required: The Chief Financial Officer (CFO) of Edgemead wants to optimize the management of cash and has asked you to calculate the optimal cash withdrawal size that would have minimized Edgemeads cost of holding cash for the year ended 31 December 2022. (4 marks) 2.3.Using the information provided below, answer the following question. INFORMATION For the next financial year, Milestones Enterprises (Milestones) is considering using the Miller-Orr model to manage its cash flows. The minimum cash balance would be R200 000. A management accountant at Milestones has estimated that the variance of daily cash flows is R3 600 000 000 (i.e., the standard deviation is approximately R60 000). The cost of buying or selling marketable securities is R100, and the daily interest rate is 1%. 2.3.1. Calculate the spread (round off answer to nearest thousand). (4 marks) 2.3.2. Calculate the Miller-Orr model upper limit and return point. (4 marks) 2.3.3. Explain how the upper limit and return point would be used to manage the cash balances of Milestones.