Find the break-even size of wire transfer if the cost of wire transfer is $20, the daily interest rate is 0.02 percent and the reduction in float is three days.

Question

Quizplus · Accepted Answer

We can use the formula:

Interest savings = Daily interest rate x Reduction in float x Amount transferred

We want to find the amount transferred that will result in interest savings equal to the cost of the wire transfer:

0.02% x 3 days x Amount = $20

0.0006 x Amount = $20

Amount = $20 / 0.0006

Amount = $33,333.33

Therefore, the break-even size of wire transfer is $33,333. Option C is the correct answer.

Find the Break-Even Size of Wire Transfer If the Cost