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