The management of the Keribels Company wishes to apply the Miller-Orrmodel to manage its cash investments. They have determined that thecost of either investing in or selling marketable securities is P 100. Bylooking at the Keribels Company's past cash needs, they have determinedthat the variance of daily cash flow is P 75,000. Keribels Company'sopportunity cost of cash per day is 0.05%. Based on their experience thecash balance should not fall below P 50,000. WHAT IS THE RETURNPOINT?(Use a number, no decimal value, no currency, no space, nocommas) *

In this we have to use Mill orr model of cash management.

he management of the Keribels Company wishes to apply hodel to manage its cash investments. They have determir ost of either investing in or selling marketable securities i poking at the Keribels Company's past cash needs, they ha hat the variance of daily cash flow is P 75,000. Keribels Co pportunity cost of cash per day is 0.05%. Based on their ash balance should not fall below P 50,00O. WHAT IS THE OINT?(Use a number, no decimal value, no currency, n sp

he management of the Keribels Company wishes to apply hodel to manage its cash investments. They have determir ost of either investing in or selling marketable securities i poking at the Keribels Company's past cash needs, they ha hat the variance of daily cash flow is P 75,000. Keribels Co pportunity cost of cash per day is 0.05%. Based on their ash balance should not fall below P 50,00O. WHAT IS THE OINT?(Use a number, no decimal value, no currency, n sp

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 11MC

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The management of the Keribels Company wishes to apply the Miller-Orr model to manage its cash investments. They have determined that the cost of either investing in or selling marketable securities is P 100. By looking at the Keribels Company’s past cash needs, they have determined that the variance of daily cash flow is P 75,000. Keribels Company’s opportunity cost of cash per day is 0.05%. Based on their experience the cash balance should not fall below P 50,000. WHAT IS THE LOWER LIMIT? (Use a number, no decimal value, no currency, no space, no commas) *
The management of the Keribels Company wishes to apply the Miller-Orr model to manage its cash investments. They have determined that the cost of either investing in or selling marketable securities is P 100. By looking at the Keribels Company’s past cash needs, they have determined that the variance of daily cash flow is P 75,000. Keribels Company’s opportunity cost of cash per day is 0.05%. Based on their experience the cash balance should not fall below P 50,000. WHAT IS THE UPPER LIMIT?
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PROBLEM The management of the Book Warehouse Company wishes to apply the Miller-Orr model to manage its cash investment. They have determined that the cost of either investing in or selling marketable securities is $100. By looking at Book Warehouse’s past cash needs, they have determined that the variance of daily cash flows is $20,000. Book Warehouse’s opportunity cost of cash, per day, is estimated to be 0.03%. Based on experience, management has determined that the cash balance should never fall below $10,000. 4. How much is the variance of daily cash flows?(Use a number, no decimal value, no commas, no currency, no space) * 5. How much is the lower limit based on the Miller-Orr model of cash management? (Use a number, no decimal value, no commas, no currency, no space) * 6. How much is the opportunity cost of cash, per day? (Use a number, must be in decimal form. eg. 6.3%/100, encode 0.063 , no commas, no currency, no space) * PLEASE ANSWER ALL QUESTIONS. THANKS!