can reduce the balance with its New York bank to $190,000 because it will do less business in New York. However, West Coast will require an additional cash balance of $190,000. What would be the net daily benefit of opening the new account? (Enter your answer in dollars, not millions.)
can reduce the balance with its New York bank to $190,000 because it will do less business in New York. However, West Coast will require an additional cash balance of $190,000. What would be the net daily benefit of opening the new account? (Enter your answer in dollars, not millions.)
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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Transcribed Image Text:Major Manufacturing currently has one bank account located in New York to handle all of its collections. The firm keeps an additional
cash balance with the bank of $270,000 to pay for these services. It is considering opening a bank account with West Coast National
Bank to speed up collections from its many California-based customers. Major estimates that the West Coast account would reduce
collection time by 1 day on the $1.60 million a day of business that it does with its California-based customers. If it opens the account, it
can reduce the balance with its New York bank to $190,000 because it will do less business in New York. However, West Coast will
require an additional cash balance of $190,000. What would be the net daily benefit of opening the new account? (Enter your answer
in dollars, not millions.)
Net daily benefit
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