The High-Rise Building Company Uses 400,000 Tons of Stone Per

question 67

Multiple Choice

The High-Rise Building Company uses 400,000 tons of stone per year. The carrying costs are $100/ton. The cost per order is $500. Calculate the optimal number of orders per year.

• A)400
• B)100
• C)200
• D)300

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Definitions:

Cash Outlay

The total amount of cash that is spent by a business or organization for certain purposes or activities, including investments or expenses.

Present Value Factors

Quantitative metrics used to calculate the current worth of a future sum of money or stream of cash flows given a specific discount rate.

Present Value

The value today of a sum of money or cash flows expected in the future, calculated with a certain rate of return.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.