How Much Value Would Be Added to a Firm That $\div$

question 103

Multiple Choice

How much value would be added to a firm that could permanently reduce its collection period by two days if daily collections average $10,000 and the opportunity cost is 5 percent annually?

• A)$1,000
• B)$1,200
• C)$10,000
• D)$20,000
• daily interest = $10,000 x 2 x .05 \(\div\) 365
• = $2.7397
• Present value of daily interest =

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Definitions:

Domestic Investment

The total amount of money that is invested within a country's borders by both public and private entities.

Real Exchange Rate

The rate at which a person can exchange the currency of one country for goods and services of another country, adjusted for price level differences.

Euros

The authorized monetary unit of the eurozone, adopted by 19 out of the 27 member states of the European Union.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much of one currency can be exchanged for another currency.