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MSU's assistant treasurer wants to use the Miller-Orr Model to determine the optimal transfer amount...

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Finance

MSU's assistant treasurer wants to use the Miller-Orr Model to determine the optimal transfer amount and has developed the following parameters: an annual opportunity cost is 12%, a fixed cost per securities transaction is $75, total annual cash needs for the year is $500,000, lower control limit = $5,000, and variance of daily cash flows = $25,000.

What should the cash return level be?

What is the optimal value of upper control limit?

What is the average cash balance?

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