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The following information relates to Warden Company. $ Lower Control limit set 1,000 Interest rate per day 0.025% Standard deviation of daily cash flows 500

The following information relates to Warden Company.

$

Lower Control limit set

1,000

Interest rate per day

0.025%

Standard deviation of daily cash flows

500

Switching costs per transaction

20

Required:

Using the Miller-Orr model compute:

  1. The upper limit
  2. The Return point

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