If a Firm Has Achieved Its Target Cash Balance the Net

question 17

Multiple Choice

If a firm has achieved its target cash balance the net present value is:

• A)positive because the cash balance is positive.
• B)zero because increasing the cash balance increases the interest cost.
• C)negative because the cash balance has a financing cost.
• D)positive because decreasing the cash decreases the cost of illiquidity.
• E)None of the above.

---

Definitions:

Decision Making

The process of selecting among various options or actions based on the evaluation of information and criteria.

Desirability

The quality of being wanted or wished for as attractive, useful, or necessary.

Organizational Targets

Specific objectives set by an organization aiming to achieve its strategic goals and mission.

Technology

The combination of knowledge, skills, equipment, and work methods used to transform inputs into outputs.