QUESTION 4 (Continued) (ii) The overdraft interest rate (15%)exceeds the yield on long- and short-term investments and there is no benefit to be in overd raft Therefore Return pont x conversion cost x variance of daily net cash flows 4x daily opportunit y cost(in decimal form 3×$20×$25000 0.12 4 =$30551 Return point =30 551 above L =$30551 U=3 return point above L =3×$30551 above L $91653 above L =$91653August 2003 QUESTION 4 (Continued) (ii) The overdraft interest rate (15%) exceeds the yield on long- and short-term investments, and there is no benefit to be in overdraft. Therefore: ( ) $30 551 365 0.12 4 3 $20 $25 000 4 daily opportunit y cost in decimal form 3 conversion cost variance of daily net cash flows Return point 3 2 3 =    =    = L = $0 = $30 551 Return point = $30 551above L = $91653 = $91653 above L = 3 $30 551above L U = 3 return point above L  