Reese's Resources Faces a Smooth Annual Demand for Cash of $15

question 99

Multiple Choice

Reese's Resources faces a smooth annual demand for cash of $15 million, incurs transaction costs of $125 every time they sell marketable securities, and can earn 4.5 percent on their marketable securities. What will be their optimal cash replenishment level?

• A) $28,867.51
• B) $288,675.13
• C) $61,237.24
• D) $6,123.72

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Definitions:

Method of Elimination

A strategy used to solve systems of equations, where you eliminate one variable to solve for another.

Method of Elimination

A technique used in algebra to solve systems of equations by canceling out one or more variables.

System of Equations

A set of equations with multiple variables, where the solution is the set of values that satisfies all equations simultaneously.

Method of Elimination

A technique for solving systems of linear equations by adding or subtracting equations in order to eliminate one of the variables.