Find the break-even size of wire transfer if the cost of wire transfer is $20,the daily interest rate is 0.02%,and the reduction in float is 3 days.
A) $1,000
B) $25,000
C) $33,333
D) $100,000

Question

Quizplus · Accepted Answer

To find the break-even size of wire transfer, we need to calculate how much money needs to be transferred to cover the $20 wire transfer cost and receive enough interest to offset the 3-day reduction in float.

Let X be the break-even size of wire transfer.

Interest earned per day = X * 0.02% = 0.0002X

Interest earned in 3 days = 0.0006X

Total cost = $20

X + 0.0006X = 20

Solving for X, we get:

X = $33,333.33

Therefore, the break-even size of wire transfer is $33,333.33, and the best choice is C).

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