Suppose That a Sells $1 Million Monthly to Subsidiary B

question 32

Multiple Choice

Suppose that A sells $1 million monthly to subsidiary B and $1.5 monthly to subsidiary C,B sells $2.2 million monthly to A and $100,000 monthly to C,and C sells $600,000 monthly to A and $500,000 to B.Bilateral netting will reduce intercompany payment flows by ____,whereas multilateral netting will reduce these flows by _____.

• A)$2.0 million,$1.7 million
• B)$3.2 million,$5.2 million
• C)$1.4 million,$3.3 million
• D)7 million,$2.7 million

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Definitions:

Financial Calculator

An electronic calculator designed to perform financial functions commonly needed in business and commerce.

Ordinary Annuity

A series of equal payments made at fixed intervals for a specified period of time.

Expressed

something that is stated or made known clearly and explicitly.

Financial Calculator

A specialized calculator used for complex financial calculations, including interest rates, loan payments, and investment values.