A treasury manager would like to develop a funds concentration policy for her staff to use to determine when to transfer funds using a wire transfer or an ACH transfer. The pertinent information appears below.Each wire costs $25Each ACH transfer costs $0.75Opportunity cost of funds is 5%Earnings credit rate is 1%Reserve requirement ratio is 10% For a mid-week transfer, what is the minimum transfer balance that justifies a wire transfer?

To determine the minimum transfer balance that justifies a wire transfer, we need to consider the…

Answered: A treasury manager would like to…

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter14: Money And Banking

Section14.3: Types Of Money In The United States

Problem 5R

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A treasury manager would like to develop a funds concentration policy for her staff to use to determine when to transfer funds using a wire transfer or an ACH transfer. The pertinent information appears below.

Each wire costs $25
Each ACH transfer costs $0.75
Opportunity cost of funds is 5%
Earnings credit rate is 1%
Reserve requirement ratio is 10%

For a mid-week transfer, what is the minimum transfer balance that justifies a wire transfer?

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