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Aurora Electrical Company has determined that through the establishment of local collection centres around the country, they can speed up the collection of payments by

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Aurora Electrical Company has determined that through the establishment of local collection centres around the country, they can speed up the collection of payments by two days. Furthermore, the cash management department of the company's bank has indicated they can defer payments on accounts by one day without offending suppliers. A B IT E a) If Aurora Electrical Company has $2.5 million per day in collections and $1.4 million per day in disbursements, how many dollars will the cash management system free up? (2 marks) b) If Aurora Electrical Company can earn 2 percent per annum on freed-up funds, how much income can be generated? (2 marks) if the total cost of the system is $125,000, should it be implemented? (2 marks) d) If Aurora electrical company has 650,000 per day in collections and $350,000 in disbursements, would your answer to c) change? (2 marks)

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