Which of the following is correct about wire transfer of funds, given that wire transfer saves three days, the annual interest rate is 6 percent, and the cost of wire transfer is $20?

Question

Quizplus · Accepted Answer

To determine the break-even point when deciding between wire transfer and depository transfer, we need to calculate the amount at which the interest earned from a wire transfer exceeds the cost of $20. 
$20 divided by 6% (annual interest rate) = $333.33
Therefore, any amount exceeding $333.33 will earn more than $20 in interest over the three days saved by wire transfer. 
$333.33 multiplied by 1.06 (the interest earned over three days) = $353.33
Therefore, wire transfers should be preferred for amounts exceeding $353.33, which is closest to option C, exceeding $40,556.

Which of the Following Is Correct About Wire Transfer of Funds