A Firm Has Estimated That It Will Need $3,000,000 Net

question 64

Multiple Choice

A firm has estimated that it will need $3,000,000 net cash during the year.Current interest rate on money market securities is 6 percent per year and the cost of buying and selling securities cost $50 per transaction.What is the optimal transaction size of securities?

• A)$70,710.68
• B)$25,100.00
• C)$65,285.21
• D)$92,511.11

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Definitions:

Internal Service Departments

Departments within an organization that provide essential services to other departments rather than external customers, such as IT support or human resources.

Inventory Control

The processes and procedures used to manage the ordering, storage, and use of components that a company will use in the production process or the management of stock available for sale.

Investment Turnover

A ratio used to measure the efficiency of a company's use of its investments in generating sales revenue, indicating how well the company is utilizing its assets.

Return On Investment

A metric for determining an investment's profitability or efficiency, achieved by dividing the net profit by the investment's total cost.