Question: Slap Shot Corporation has a fixed cost associated with buying
Slap Shot Corporation has a fixed cost associated with buying and selling marketable securities of $40. The interest rate is currently .013 percent per day, and the firm has estimated that the standard deviation of its daily net cash flows is $80. Management has set a lower limit of $1,500 on cash holdings. Calculate the target cash balance and upper limit using the Miller–Orr model. Describe how the system will work.
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