A Company Carries an Average Annual Inventory of $1,000,000

Multiple Choice

A company carries an average annual inventory of $1,000,000. If the cost of capital is 10%, storage costs are 8%, and risk costs are 7%, what does it cost per year to carry this inventory?

A) $100,000
B) $80,000
C) $70,000
D) $250,000
E) cannot be determined from the data given