Nielson Motors Has No Debt,and Maintains a Policy of Holding

question 43

Multiple Choice

Nielson Motors has no debt,and maintains a policy of holding $80 million in excess cash reserves,invested in risk free treasury securities currently yielding 3%.If Nielson is in the 35% marginal tax bracket,the cost of permanently maintaining this $80 million reserve is closest to:

• A)$0.85 million
• B)$1.6 million
• C)$24.0 million
• D)$28.0 million

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Definitions:

19th Century

Refers to the 1800s, a period marked by industrialization, political changes, and significant technological advancements.

18th Century

The period from 1701 to 1800, recognized in history for significant social, political, and industrial changes worldwide.

Adam Smith

He was an 18th-century Scottish economist and philosopher, best known for his work "The Wealth of Nations", which laid the foundation for classical economics and the concept of an 'invisible hand' guiding free markets.

Economic Role

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