he Staal Corporation is trying to decide whether to switch to a bank that will accommodate electronic funds transfers from Staal's customers. Staal's financial manager believes the new system would decrease its collection float by as much as five days.  The new bank would require a compensating balance of $2,000,000, whereas its present bank has no compensating balance requirement.  Staal’s average daily collections are $800,000, and it can earn 8% on its short-term investments.  Should Staal make the switch?

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Receivables Management