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

Question

Quizplus · Accepted Answer

The Answer of 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

Rose Resources Faces a Smooth Annual Demand for Cash of $10