Rate of return on weekly investments, Lock box
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8) A company's weekly cash position is as follows:
? Week 1 $24,000
? Week 2 $34,000
? Week 3 $10,000
? Week 4 $15,000
The annual interest rate for investments is 12% what return can the company earn on these weekly investments.
9) A company with most of its customers in New York, has decided to consider using a lock box to help improve it's cash flow. The bank has indicated it will be able to reduce the company's collection float by 3 days. Given the following details should the lock box option be used
? Average number of payments per day in new York is 150
? Average value of each payment is $15,000
? Fixed annual lock box fee is $80,000
? Transactional fee for lock box use is $.50 per payment
? Money market Investment has a interest rate of 7.5%
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Solution Summary
The solution calculates rate of return on weekly investments and decides whether a lock bos system should be used.
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8) A company's weekly cash position is as follows:
? Week 1 $24,000
? Week 2 $34,000
? Week 3 $10,000
? Week 4 $15,000
The annual interest rate for investments is 12% what return can the company earn on these weekly investments
Annual interest= 12%
Number of weeks in a year= 52
Therefore weekly ...
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