A firm collects $60 million at an annual rate (252 days) which is expected to remain at that same level. The bank could establish a system that would save the firm 5 days in mail float, 2 days in processing float and $45,000 in annual clerical fees. The bank would charge a flat fee of $120,000.00 for this service. The firm’s money market account could earn an annual rate of 6% return. Prepare a benefit/ cost calculation to determine if the company should go ahead with the proposed system
A firm collects $60 million at an annual rate (252 days) which is expected to remain at that same level. The bank could establish a system that would save the firm 5 days in mail float, 2 days in processing float and $45,000 in annual clerical fees. The bank would charge a flat fee of $120,000.00 for this service. The firm’s money market account could earn an annual rate of 6% return. Prepare a benefit/ cost calculation to determine if the company should go ahead with the proposed system
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A firm collects $60 million at an annual rate (252 days) which is expected to remain at that same level. The bank could establish a system that would save the firm 5 days in mail float, 2 days in processing float and $45,000 in annual clerical fees. The bank would charge a flat fee of $120,000.00 for this service. The firm’s
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