The standard deviation of weekly net cash flows for the bakery is $1,000. Transactions costs sell securities to replenish cash is $25 each. The annualized interest rate earned on its marketable securities is 2.0%. Management likes to keep $2,000 as its minimum balance. Using the Miller-Orr model.
a. What is the target cash balance C?
b. What is the average cash balance?
c. What is the upper cash balance ?
Show all work please.