The optimal cash replenishment level will increase with all of the following changes EXCEPT
A) the transaction cost decreases.
B) the annual demand for cash increases.
C) the interest rate decreases.
D) All of these choices are correct.

Question

Quizplus · Accepted Answer

The optimal cash replenishment level will not increase if the transaction cost decreases; it would actually decrease because lower transaction costs make it cheaper to replenish cash more frequently.

The Optimal Cash Replenishment Level Will Increase with All of the Following