MXP Co has set a minimum cash account balance of $75,000. The average cost to the...

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MXP Co has set a minimum cash account balance of $75,000. The average cost to the company of making deposits or selling securities is $50 per transaction and the standard deviation of its cash flows was $5,000 per day during the last year. The average interest rate on investments is 4.38%. Determine the spread, the upper limit and the target cash balance for MXP using the Miller- Orr model and explain how the model operates. MXP Co has set a minimum cash account balance of $75,000. The average cost to the company of making deposits or selling securities is $50 per transaction and the standard deviation of its cash flows was $5,000 per day during the last year. The average interest rate on investments is 4.38%. Determine the spread, the upper limit and the target cash balance for MXP using the Miller- Orr model and explain how the model operates.

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The MillerOrr model is a cash management model that helps a company determine its target cash balance upper limit and spread for managing its cash It ... View the full answer