Bavarian Sausage Cash Transfer
Bavarian Sausage needs to transfer $250,000 from its deposit account into its concentration account. The company could do it with an EDT which would cost $1.50 or a wire transfer for $17. The wire transfer would result in the funds being deposited in the concentration account 2 days earlier. The firm’s opportunity cost is 10% and we assume a 360 day year.

-What is the benefit for Bavarian Sausage from using the wire transfer?

Question

Bavarian Sausage Cash Transfer
Bavarian Sausage needs to transfer $250,000 from its deposit account into its concentration account. The company could do it with an EDT which would cost $1.50 or a wire transfer for $17. The wire transfer would result in the funds being deposited in the concentration account 2 days earlier. The firm’s opportunity cost is 10% and we assume a 360 day year.

-What is the benefit for Bavarian Sausage from using the wire transfer?

Quizplus · Accepted Answer

marginal benefit = 250,000(10/180)= 138.89