You are the general manager of ABC Company. You need to establish a cash management policy. The first step toward establishing your policy is to decide about your target cash balance. You know that you always need a minimum of $$10,000$ in your cash account. You also know that every time you buy or sell securities$,$ it costs you $$300.$ The opportunity cost of holding cash for your company is$10\%$ per year. Based on the last five years of data, you know that the standard deviation of daily net cash flows for the company is $$4000.$ If you use the Miller$-$Orr Model to determine variables of your policy,

a$.$ What would your target cash balance be$?$ Show your work.

b$.$ Determine the upper control limit and the average cash balance.

c$.$ What is the annual cost of carrying this level of cash?

d$.$ Now suppose you intend to use the Baumol$$s model to determine variables of your policy. Assuming that you still intend to maintain the lower limit of $$10,000$ and the upper limit determined in part $($b$),$ what is the average cash balance during the year?

e$.$ What is the annual cost of carrying this level of cash?