Theta Corporation receives checks from its customers. The total check value averages P700,000 each day. It takes an average of 5 days from deposit for these to clear the bank. If the bank offers to accelerate the 5-day clearing process hy 3 days for a menthly fee of D500 JE Thata can

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter17: The Management Of Cash And Marketable Securities
Section: Chapter Questions
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Theta Corporation receives checks from its customers.
The total check value averages P700,000 each day. It takes
an average of 5 days from deposit for these to clear the
bank. If the bank offers to accelerate the 5-day clearing
process by 3 days for a monthly fee of P500. If Theta can
earn 4% investment income from excess cash, how much
is the net annual benefit/(cost) of this bank offer?
AE3219
Transcribed Image Text:4 points Theta Corporation receives checks from its customers. The total check value averages P700,000 each day. It takes an average of 5 days from deposit for these to clear the bank. If the bank offers to accelerate the 5-day clearing process by 3 days for a monthly fee of P500. If Theta can earn 4% investment income from excess cash, how much is the net annual benefit/(cost) of this bank offer? AE3219
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