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A financial manager is attempting to decide whether to use EDT or wire transfer but must first




A financial manager is attempting to decide whether to use EDT or wire transfer but must first calculate the minimum balance to transfer. Assume that the transfer will occur;during the middle of the week.Using the data provided below, calculate the TBAL.;b. Assume that the balances;transferred are below the balances;a. Assume that the balance transferred are above the required to compensate the deposit;balance required to compensate the deposit bank for its bank. Calculate the minimum;services. Calculate the minimum transfer balance;transfer balance to justify the use of c. Why are the answers in two;required to justify the use of a wire transfer.;a wire transfer.;preceding parts different?;Numbers of days saved;1;Annual investment opportunity cost rate, k;10%;Bank's earnings credit rate, ecr;7%;Required reserve rate, rr;10%;Wire transfer cost;$20;EDT cost;$0.75;Module Five Homework Assignment;Problem 3 Page 273;The following data were recently collected by the cash manager at RAYCO Department Stores, Inc.;DAY;Monday;Tuesday;Wednesday;Thursday;Friday;Saturday;Sunday;DOLLAR DEPOSIT;$1,500.00;$2,000.00;$1,000.00;$10,000.00;$25,000.00;$35,000.00;$10,000.00;These daily deposit are typical of RAYCO'S ten regional stores. RAYCO is headquartered in Oklahoma City and concentrates cash from the ten local deposit banks to its concentration;bank in Oklahoma City. You may assume that RAYCO's opportunity investment rate is 10%, the ECR is 8% and the reserve requirement is 12%. Further assume that RAYCO uses EDTs to concentrate;the cash balances and the EDT is initiated on the day of deposit and clears the next day. Deposits are made before the daily ledger cut-off time. Also half of each deposit is cash and half is in checks with;one day availability. Finally, assume that no bank clearing activity is conducted on the weekends and the beginning ledger and collected balance for the first week are equal to zero.;a. Assuming that the deposit schedule is typical of each week, create two weeks of deposit and transfer clearing activity similar to the in-text examples given for Tri-Treck;b. Calculate the average collected balance at the typical deposit bank.;c. Assuming that each EDT costs $1.00, calculate the dollar amount of collected balances required to compensate the deposit bank.;d. What is the total cost of the cash concentration system for one bank for one week?;e. Can you suggest any improvement in RAYCO's cash concentration system?;Module Five Homework Assignment;Problem 3 (from Chapter 10);What factors determine how frequently transfers should be made from a deposit account to a concentration account? Find a minimum of one peered-reviewed;article form a financial journal in the SNHU Online Library to support your response. Your response should be at least 150 words in length. Remember to list your;references in the reference section of this worksheet and properly cite them in accordance to APA citation requirements.;References


Paper#30519 | Written in 18-Jul-2015

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