Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your firm's management of its cash position is based on the Miller-Orr model. The weekely standard deviation of the disbursements is $8,600. The applicable weekly

image text in transcribed

Your firm's management of its cash position is based on the Miller-Orr model. The weekely standard deviation of the disbursements is $8,600. The applicable weekly interest rate is 0.054 percent and the fixed cost of transferring funds is $65. Suppose your firm's target cash balance, C* = 68,830. (i) What lower cash balance limit (L) is consistent with this information. (ii) Find U*, the firm's implied maximum cash balance limit. (iii) Find your firm's average cash balance held over time. (iv)Using your answer to part (iii), find the average dollar cost incurred by the firm from holding cash over a two-week period. >

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Public Health And Not For Profit Organization

Authors: Steven A. Finkler

3rd International Edition

0138152772, 9780138152772

More Books

Students also viewed these Finance questions