29. Payment systems (S31.4) A parent company settles the collection account balances of its subsidiaries once a
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29. Payment systems (S31.4) A parent company settles the collection account balances of its subsidiaries once a week. (That is, each week it transfers any balances in the accounts to a central account.) The cost of a wire transfer is $10. A check costs $0.80. Cash transferred by wire is available the same day, but the parent must wait three days for checks to clear. Cash can be invested at 12% per year. How much money must be in a collection account before it pays to use a wire transfer?
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Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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