Theta Corporation receives checks from its customers. The total check value averages P700,000 each day. It takes an average of 5 days from deposit for these to clear the bank. If the bank offers to accelerate the 5-day clearing process hy 3 days for a menthly fee of D500 JE Thata can

Theta Corporation receives checks from its customers. The total check value averages P700,000 each day. It takes an average of 5 days from deposit for these to clear the bank. If the bank offers to accelerate the 5-day clearing process hy 3 days for a menthly fee of D500 JE Thata can

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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Question

4 points
Theta Corporation receives checks from its customers.
The total check value averages P700,000 each day. It takes
an average of 5 days from deposit for these to clear the
bank. If the bank offers to accelerate the 5-day clearing
process by 3 days for a monthly fee of P500. If Theta can
earn 4% investment income from excess cash, how much
is the net annual benefit/(cost) of this bank offer?
AE3219

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