Suppose That a Sells $1 Million Monthly to Subsidiary B

Multiple Choice

Suppose that A sells $1 million monthly to subsidiary B and $monthly to subsidiary C, B sells $million monthly to A and $100,000 monthly to C, and C sells $600,000 monthly to A and $500,000 to B. Bilateral netting will reduce intercompany payment flows by _______, whereas multilateral netting will reduce these flows by _______.

A) $2.0 million, $1.7 million
B) $3.2 million, $5.2 million
C) $1.4 million, $3.3 million
D) 7 million, $2.7 million