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    Financial Problem: Determining Interest Savings

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    Pronet has annual sales of $724 million from its 600 retail stores. Pronet can reduce its mail float by 2 days through the use of wire transfers. The annual cost of the wire transfers is expected to be $105,610. If Pronet's cost of short-term funds is 9.75 percent, should the change to wire transfers be made? Assume 365 days per year.

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    Solution Preview

    Cost for 2 days @ 9.75% = $724 * (9.75/100)*(2/365)M = ...