Donaldson, Inc. spends $79,000 a week to pay bills and maintains a lower cash balance limit of $20,000. The standard deviation of the disbursements is $10,000. The applicable weekly interest rate is.05 % and the fixed cost of transferring funds is $45. What is your optimal average cash balance based on the Miller-Orr model?
A) $38,529
B) $45,196
C) $48,345
D) $51,863
E) $60,805
Correct Answer:
Verified
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