Gen Combo Looseleaf Principles Of Corporate Finance With Connect Access Card
13th Edition
ISBN: 9781260695991
Author: Richard A Brealey
Publisher: McGraw-Hill Education
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Question
Chapter 30, Problem 26PS
Summary Introduction
To determine: Minimum amount needed to justify a wire transfer.
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Students have asked these similar questions
Example
One of the companies adopts a central system for the payment of
payment bills through the general administration, and this requires
an average of 4 days for the checks to reach the customers as well
as
1,5
The day of registration of checks before they are deposited in the
bank, and the average company receipts are 500 thousand dinars
per day. The company is studying the possibility of using mailboxes
through renting, and this will reduce the time for mailing checks by
an amount
2,5
day, and the time required to prepare checks for deposit is reduced
by one day. Required:
1. What is the amount of cash that can be released in this process?
2. Determine the alternative cost of the released funds if the return
on financial instruments
Short term 5%?
3. Is it feasible to use this system when considering the alternative
cost?
For the liberated money, if the costs of the local mailbox system are
75,000 dinars annually?
The firm's bank charges $18 per wire and $0.50 per EDT. The EDT takes one day longer to clear. The investment opportunity rate is 4%. The bank's Earnings credit rate is 0.5% on account balances. The RRR is 10%. What is the minimum transfer balance that justifies a wire transfer?
Step by step explanation needed with correct answer.
Receivables and Cash: Collection FloatA firm has daily cash receipts through checks. On average 150 checks are received per day while each check has an averagevalue of P2,500. It takes an average of 3 days for the bank to clear the checks. A bank has offered to decrease the clearingperiod to one day for a monthly fee of P500. The bank gives an interest rate of 3% per year.Required:19. How much would ABC receive as total annual interest on the freed cash?20. How much is the annual cost of the service?21. What is the annual net benefit or (loss) from having this service?
Chapter 30 Solutions
Gen Combo Looseleaf Principles Of Corporate Finance With Connect Access Card
Ch. 30 - Prob. 1PSCh. 30 - Components of working capital True or false? a....Ch. 30 - Inventory True or false? a. Just-in-time inventory...Ch. 30 - Inventory What are the trade-offs involved in the...Ch. 30 - Prob. 5PSCh. 30 - Prob. 6PSCh. 30 - Prob. 7PSCh. 30 - Prob. 8PSCh. 30 - Prob. 9PSCh. 30 - Credit terms Phoenix Lambert currently sells its...
Ch. 30 - Prob. 11PSCh. 30 - Prob. 12PSCh. 30 - Prob. 13PSCh. 30 - Prob. 14PSCh. 30 - Prob. 15PSCh. 30 - Credit policy How should your willingness to grant...Ch. 30 - Prob. 17PSCh. 30 - Prob. 18PSCh. 30 - Prob. 19PSCh. 30 - Prob. 20PSCh. 30 - Cash management Complete the passage that follows...Ch. 30 - Prob. 22PSCh. 30 - Prob. 23PSCh. 30 - Prob. 24PSCh. 30 - Prob. 25PSCh. 30 - Prob. 26PSCh. 30 - Prob. 27PSCh. 30 - Prob. 28PSCh. 30 - Prob. 29PSCh. 30 - Prob. 30PSCh. 30 - Prob. 31PSCh. 30 - Prob. 32PSCh. 30 - Prob. 34PSCh. 30 - Prob. 35PSCh. 30 - Prob. 36PSCh. 30 - After-tax yields Suppose you are a wealthy...Ch. 30 - Prob. 38PSCh. 30 - Prob. 39PS
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- Receivables and Cash: Collection FloatA firm has daily cash receipts through checks. On average 150 checks are received per day while each check has an averagevalue of P2,500. It takes an average of 3 days for the bank to clear the checks. A bank has offered to decrease the clearingperiod to one day for a monthly fee of P500. The bank gives an interest rate of 3% per year.Required:16. How much is the daily cash receipts?17. How much is the decrease of the clearing float in days?18. How much would the average cash in bank balance increase by if the ABC took the bank’s offer?19. How much would ABC receive as total annual interest on the freed cash?20. How much is the annual cost of the service?21. What is the annual net benefit or (loss) from having this service?arrow_forward4. ABC Co. has received proposals from several banks to establish a lockbox system to speed up receipts. The firm receives an average of 700 checks per day averaging P1, 800 each and its cost of short term funds is 7% per year. If all proposals will produce equivalent processing results, which bank proposed charges is best 2 be adopted? A. A fee of .03% of the amount collected B. P.50 fee per check C. a compensating balance of P1, 750, 000 D. a flat fee of P125, 000 a yeararrow_forwardThe daily cash inflows of a company amount to $ 65,000.00. A recent analysis of their collections revealed that it took 21/2 days for customer payments to arrive by mail. Once received, the company required 1'/2 days to process them, and three days after they were deposited they appeared in the bank balances. a) What is the delay (in days) that the company normally experiences in the collection of its accounts? b) If the opportunity cost of the company is 11%, is it advisable for the company to pay an annual fee of $ 16,500.00 in order to reduce the delay in the collection of accounts by 3 days? Explain your answer.arrow_forward
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