3. What cost of transfers would make the company indifferent between the two systems? Webb Company was founded 20 years ago by its president, Bryan Webb.

The company originally began as a mail-order company, but it has grown rapidly in recent years, in large part due to its website. Because of the wide geographical dispersion of the company’s customers, it currently employs a number collection centres each in Sydney, Melbourne, Perth and Adelaide.

Holly Lennon, the company’s treasurer, has been examining the current cash collection policies. On average, each collection centre handles $207 000 in payments each day. The company’s current policy is to invest these payments in short-term marketable securities daily at the collection centre banks. Every two weeks, the investment accounts are swept; the proceeds are wire-transferred to Webb’s headquarters in Brisbane to meet the company’s payroll. The investment accounts each earn 0.013 per cent per day, and the wire transfers cost 0.20 per cent of the amount transferred