ABC Ltd. Receives cash at a gradual and steady rate of Rs. 3,50,000 p.a. The cash can be invested by the company to give a return of 12% p.a. However every time it invests it has to meet the transaction expenses of Rs. 50 plus 1% brokerage of the amount invested. Another investment broker has approached the company to take up the investment work. He has offered to charge Rs. 100 per transaction plus 0.8% of the amount invested. Should the company accept the offer?

Answer rating: 100% (QA)

ABC ltd should accept the offer as it saves some cash ... View the full answer