The Cow Pie Spreader Co. spends $214,000 a week to pay bills and maintains a lower cash balance limit of $175,000. The standard deviation of the disbursements is $16,000. The applicable weekly interest rate is 0.025 percent and the fixed cost of transferring funds is $49. What is the firm's cash balance target based on the Miller-Orr model?
A) $208,511
B) $247,560
C) $251,006
D) $254,545
E) $258,878
Correct Answer:
Verified
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