Rose Resources Faces a Smooth Annual Demand for Cash of $10

question 65

Multiple Choice

Rose Resources faces a smooth annual demand for cash of $10 million, incurs transaction costs of $325 every time they sell marketable securities, and can earn 3.9 percent on their marketable securities. What will be their optimal cash replenishment level?

• A) $28,867.51
• B) $288,675.13
• C) $40,824.83
• D) $408,248.29

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Definitions:

Confidence Interval

A range of values, derived from the sample statistics, that is likely to contain the value of an unknown population parameter.

Standard Deviation

A statistical metric that captures the dispersion of a dataset relative to its mean, indicating how spread out the data points are.

Internet Purchases

Buying goods or services online through websites or mobile apps.

Margin of Error

An expression of the amount of random sampling error in a survey's results, indicating a range within which the true value lies with a certain level of confidence.