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Reduction of mail float: net 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? Assuming 365 days per year. This problem is to determine interest savings.

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Solution Summary

The solution determinines net savings that result from a reduction of mail float through the use of wire transfers.

Solution Preview

Annual Sales= $724,000,000
No of days in a year= 365
Therefore daily sales= $1,983,562 ...

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