Buster's Needs $168,000 a Week to Pay Bills and Has

question 17

Multiple Choice

Buster's needs $168,000 a week to pay bills and has established a lower cash balance limit of $75,000. The applicable interest rate is 3.17 percent and the fixed cost of transferring funds is $34. Based on the BAT model, what is the optimal initial cash balance?

• A) $112,008
• B) $127,515
• C) $104,141
• D) $136,893
• E) $138,407

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Definitions:

Total Cost

The sum of all costs incurred in the production of goods or services, including both fixed and variable costs.

Profitable Level

The point at which a business or economic activity generates revenue that exceeds its costs, resulting in a financial gain.

Minimum Points

The lowest scores or levels that must be achieved in a particular framework, often used in educational or competitive contexts.

Maximum Points

Refers to the highest value or peak point that can be achieved within a given set of parameters or conditions.