You Have Been Provided with the Following Information for Division

question 45

Multiple Choice

You have been provided with the following information for Division Sell of a decentralized company: Division Buy would like to purchase all of its units internally.Division Buy needs 6,000 units each period and currently pays $84 per unit to an outside firm.What is the lowest price that Division Sell could accept from Division Buy? Assume that Division Buy wants to use a sole supplier and will not purchase less than 6,000 from a supplier.

• A)$90.
• B)$84.
• C)$80.
• D)$66.
• E)$40.

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Definitions:

Forward Contract

A customized contract between two parties to buy or sell an asset at a specified future date for a price agreed upon today.

Futures Contracts

Standardized legal agreements to buy or sell something at a predetermined price at a specified time in the future, often used for commodities or financial instruments.

Troy Oz

A unit of measure for precious metals, where one troy ounce equals approximately 31.1035 grams.

Futures Contracts

Legal agreements to buy or sell a particular commodity or asset at a predetermined price at a specified time in the future.