Assume a wire transfer provides immediate availability,a depository transfer check provides two-day availability,and deposit balances earn an ECR (earned credit rate)of 8%.Under these assumptions,the minimum amount a company can transfer in order to justify the cost of a wire transfer is $200,000.If the bank reduces the ECR to 5%,the amount required to justify a wire transfer will:

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The minimum amount required to justify the cost of a wire transfer is calculated based on the ECR. If the ECR reduces from 8% to 5%, the company would earn less interest on their deposit balances, which means they would need to transfer more money to justify the cost of a wire transfer. Therefore, the amount required to justify a wire transfer will decrease (choice C).

Assume a Wire Transfer Provides Immediate Availability,a Depository Transfer Check