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##### Finance Help SNHU 610-The following data were recently collected by the cash manager at Rayco Department Stores, Inc.

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Question;Finance Help SNHU 610Problem 5The following data were recently collected by;the cash manager at Rayco Department Stores, Inc.;Day;Dollar Deposit;Monday;\$1,500;Tuesday;2,000;Wednesday;1,000;Thursday;10,000;Friday;25,000;Saturday;35,000;Sunday;10000;These daily deposits are typical of Rayco's 10 regional stores.;Rayco is headquartered in Okla?homa City and concentrates cash from the 10;local deposit banks to its concentration bank in Oklahoma City. You may;assume that Rayco's opportunity investment rate is 10 percent, the ECR is 6;percent, and the reserve requirement is 12 percent. Further assume that Rayco;uses EDTs to concentrate the cash balances and that 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, 60% of each deposit is cash and 40% is in;checks with I-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 in format;to Exhibits 10-5 through 10-10.;b. Calculate the average collected balance at the typical;deposit bank.;c. Assuming that each EDT costs \$1.50, 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?

Paper#47535 | Written in 18-Jul-2015

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