Estimate the cost per transaction

Reference no: EM131491537

Question: The Seminole Company wishes to apply the Miller-Orr model to manage its cash investment. Seminole's management has collected the following estimates:

Cost per transaction = $200

Variance of daily cash flows = $10,000

Opportunity cost of cash, per day = 0.05%

Seminole management has figured, based on their experience dealing with the cash flows of the company, that there should be a cushion- a safety stock-of cash of $20,000. Calculate the following:

a. the lower limit

b. the return point

c. the upper limit

Reference no: EM131491537

Questions Cloud

Operating cash flow after tax salvage value total cash flows : Operating Cash Flow After tax salvage value Total Cash Flows PV of Cash Flows Net Present Value of Project

What is the yield to call of the bond : What is the yield to call of the bond?

Mathematical calculations-savings account : How much will he have in 5 years if the interest rate is 7% APR with quarterly compounding?

Determine the direction of the stock market : When analysing key macroeconomics data to assess GDP growth/decline, how would you measure the performance relative to sequential and year-to-year data?

Estimate the cost per transaction : The Seminole Company wishes to apply the Miller-Orr model to manage its cash investment. Seminole's management has collected the following estimates.

Unification of germany into one country : Please write 1-3 paragraphs explaining why the unification of Germany into one country (combining East and West Germany) proved.

What amount would they be able to withdraw from this account : If a person is given $1 and invests that $1 for 100 years at 5%, what amount would they be able to withdraw from this account after the 100-year period?

Total compensation-the job evaluation process : Discuss the purpose of job evaluation and the main steps in conducting job evaluation. Discuss the advantages and pitfalls of job analysis.

Classify the costs as variable costs or fixed costs : Classify the costs as variable costs or fixed costs. Explain the importance of distinguishing between variable and fixed costs.

User Account

All Pages