ACCA FM Syllabus C. Working Capital Management - Miller-Orr Model - Past Papers ^{4 / 4}

Wobnig Co is considering using the Miller-Orr model to manage its cash flows. The minimum cash balance would be $200,000 and the spread is expected to be $75,000.

Required:

Calculate the Miller-Orr model upper limit and return point, and explain how these would be used to manage the cash balances of Wobnig Co.