What is the opportunity cost of Golden Co. in keeping a cash balance of P2,000,000, if the daily interest rate is 0.02% and the average transaction cost of investing money overnight is P25? P400 P25 P40,000 P375

What is the opportunity cost of Golden Co. in keeping a cash balance of P2,000,000, if the daily interest rate is 0.02% and the average transaction cost of investing money overnight is P25? P400 P25 P40,000 P375

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

What is the opportunity cost of Golden Co. in keeping a cash balance of P2,000,000, if the daily interest rate is 0.02% and the average transaction cost of investing money overnight is P25?

P400

P25

P40,000

P375

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