What Is the Benefit for a Firm with Daily Sales

question 32

Multiple Choice

What is the benefit for a firm with daily sales of $30,000 to be able to speed up collections by 3 days, assuming an annual opportunity cost of funds of 8%?

• A) $7,200 daily benefit
• B) $7,200 annual benefit
• C) $30,000 annual benefit
• D)$90,000 annual benefit

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Definitions:

Value of Money

The purchasing power of money, which can be influenced by factors like inflation and interest rates.

Money Demand

The total amount of money that households and businesses wish to hold in the form of cash or deposits, at a given time.

Quantity of Money

The total amount of money available in an economy, including currency and balances held in checking and savings accounts.

Prices Fall

A situation where the amount of money required to purchase goods or services decreases, typically due to reduced demand or increased supply.