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:

Managers

Individuals in an organization responsible for controlling or administering all or part of a company or similar organization, including planning, directing, and overseeing operations and people.

Strategic Plans

Forward-looking plans that outline an organization's goals and define the strategy and actions required to achieve them.

Tactical Plans

Short-term, specific plans created to implement the strategies of an organization, generally focusing on achieving specific goals within a one to three-year period.

Goals Characteristics

The attributes that make goals effective, such as being specific, measurable, attainable, relevant, and time-bound (SMART criteria).