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Determine the target cash level and upper limit

Problem:

The variance of the daily net cash flows for the Tseng Asian Import Co is $1.44 million. The opportunity cost to the firm of holding cash is 8% per year. The fixed cost of buying and selling securities is $600 per transaction.

What should the target cash level and upper limit be, if the tolerable lower limit has been established at $20,000?

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Accounting Basics: Determine the target cash level and upper limit

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