EN305 Financial Management Midterm II, 2/21/2019 (30 points) it typically takes Lawrence Corporation 8 days to receive and deposit customer remissions. Lawrence is considering a lockbox system and anticipates that the system will reduce the float time to 5 days. Average daily cash receipts are $220,000. The rate of return is 10 percent. 3. a. What is the reduction in cash balances associated with implementing the system? b. What is the rate of return associated with the earlier receipt of the funds? c. What should be the maximum monthly charge associated with the lockbox proposal? 4. (20 points) Demand deposits maintained by a firm to compensate a bank for services provided, credit lines, or loans. A $100,000 loan at 10% stated interest rate for 1 year with a required $150,000 compensating balance. Calculate the simple interest amount, and Discount interest rate. (10 points) We have discussed several short-term financing options. Would you describe "Line of Credit?" What is the main difference from the use of credit card? 5. EN305 Financial Management Midterm II, 2/21/2019 (30 points) it typically takes Lawrence Corporation 8 days to receive and deposit customer remissions. Lawrence is considering a lockbox system and anticipates that the system will reduce the float time to 5 days. Average daily cash receipts are $220,000. The rate of return is 10 percent. 3. a. What is the reduction in cash balances associated with implementing the system? b. What is the rate of return associated with the earlier receipt of the funds? c. What should be the maximum monthly charge associated with the lockbox proposal? 4. (20 points) Demand deposits maintained by a firm to compensate a bank for services provided, credit lines, or loans. A $100,000 loan at 10% stated interest rate for 1 year with a required $150,000 compensating balance. Calculate the simple interest amount, and Discount interest rate. (10 points) We have discussed several short-term financing options. Would you describe "Line of Credit?" What is the main difference from the use of credit card? 5