need ASAP

Slide =1: Key Attributes of FFF 's Current Collection System (Western Region, Last Year's Data) 1. Our western reglon customers, stores that sell our retro-style sandais and shoes, remit 5,500 checks per month to our office in Portland. 2. Annual collections for the region were $63,875,000. 3. The average delay due to float was 15 days (8 days mail float, 4 days processing float, and 3 days dearing float). 4. Our Portland bank currently charges $24,000 per year in service charpes and fees of $0.25 per payment to process these payments. 5. FFF maintains a marketable securities portfolio that earns an average return of 3%. CFO: Okay, let's stop here for a second. thave a question. How much does our current system cost us? RYAN: Ma'am, you're getting ahead of me a little; that information is detailed on slide 2 . Let me show you Slide 2: Costs of FF's Current Collection System (Western Region, Last Year's Data) Annual service charges =$24,000 Annual per-payment processing fees - \begin{tabular}{ll} Cost of the current system - & $16,500 \\ \hline$9,900 \\ \hline$23,100 \\ \hline \end{tabular} BYAN: In contrast to the existing system, our Portland bank has offered to create a lockbox system that would involve customers sending their payments directiv to Stide 1: Key attributes of FFF's Current Collection System (Western Region, Last Year's Data) 1. Our western region customers, stores that sell our retro-style sandals and shoes, remit 5,500 checks per month to our office in Portland. 2. Ansual collections for the region were $63,875,000. 3. The average delay doe to flout was 15 days (a days mall float, 4 days processing float, and 3 days dearing float). 4. Our Portiand bank currently charges $24,000 per year in service charges and fees of $0.25 per parment to process these parments. 5. FFF maintains a marketable secirities portfolio that eams an average feturn of 3%. CFO: Okay, let's stop here for a second. I have a question. How much does our current system cose us? RYAV: Ma'am, rou're getting ahead of me a little; that information is detailed on side 2 . Let me shew you. Stide *2: Costs of HFF's Current Collection System (Western Region, Last Year's Data) Annual service charges =$24,000 Annual per-parment processing fees - Cost of the current systim - Cro: Good. What's next? BYAN: In contrast to the existing system, our Portland bank has offered to create a lockbox system that would involve customers sending their payments directly to in their region. The banks will process the deposits and then wire the funds to our Signment: Chapter 15 Managing Short-Term Assets RYAN: In cootrast to the exdsting system, our Portand bank has offered to create a lockbox systern that would involve customers sending their payments directly to in their region. The banks will process the deposits and then wire the funds to our bank in Portland. The specifics of the proposal are detailed in slide 3. Slide =3: Costs of fFF's Proposed Lockbox System 1. The average delay doe to float will be reduced to 3 days ( 2 days mail float; no processing float; 1 day dearing foat, including the wire transfer delay). 2. The bank will eliminate its current service charges and fees but will impose a compencating balance of $30,000 on our Portland account, Similar balances will not be required in the other six banks. 3. Funds teleased by the lockbox system will be invested in marketable securities and will eam an average return of 3%. CFO: 50, should we switch from our current decentralited collection snstem to the lockbox system? RYAN: Yes, 1 think we should. The benefic to the locbbox system is that it saves us 12 days of float. Wait, let me show you slide 4. Stide *4: Evaluation of HF's Proposed Lockbox System Average collections =$175,000 Released funds - CFo: So, now thave three questions. First, based on these values, how does the Finance Committee knew whether to reconamend accepting the lodbox proposal? That is, how should we interpret these values? Second, should we give up our current sritem and switch to the loobax sntem? And finally, are there any other methods that IFF could use instead of a lockbox system to return customer funds to the Portland RYAN: In coptrast to the exosting system, our Portland bank has offered to create a lockbox system that would involve customers sending their parments directly to in their region. The banks will process the deposits and then wire the funds to our bank in Portand. The specifics of the proposal are detailed in slide 3. Slide 3: Costs of FFF's Proposed tockbox System 1. The average delay due to float will be reduced to 3 davs ( 2 days mall float; no processing float, 1 day dearing float, including the wire transfer delay). 2. The bank will eliminate its current service charpes and fees but wil impose a compensating balance of $30,000 on our Portiand account. Similar balances will not be required in the other six banks. 3. Funds released by the lockbox smatem will be invested in marketable securities and will earn an average return of 3%. Cro: So, should we switch from our current decentralired collection srstem to the lockbox system? IRYN: Yes, 1 think we should. The benefie to the lockber syitem is that it saves us of noat, Wat, let me show you slide 4. Slide w I I valuation of IIF's Preposed l ockbox Srstem Average collections =1175,000 Released funds = Income earned from the released funds - Cost of lockbor syitem - Net eamings on the fockook syitem - Niet value of the lockbox system over the Cro: So, now 1 have three questions, First, based on these values, how does the Finance Comaittee know whether to recommend accepting the locibox proposal? That is, hew should we interpret these valuew? Second, should we give up our current system and switch to the lockbox RYAN: in coptrast to the existino system, our Portiand bank has offered to create a lockbox system that would involve custorners sending their parments directly to in their region. The banks will process the deposits and then wire the funds to our batik in Portland. The specifics of the proposal are detalled in slide 3 . Slide =3 : Costs of FF's Proposed tockbox System 1. The average delay due to float will be reduced to 3 days ( 2 days mall float, no processing float; 1 day clearing float, including the wire transfer delay). 2. The bank will eliminate its current service charges and fees but will impose a compensating balance of $30,000 on our Portland account. simlar balances will not be required in the other six banks. 3. Funds released by the lockbox system will be invested in markbtable securities and wall harr an average return ef 3 \%. CrO: 50, should we switch from our current decentralifed collection system to the lockbox system? Wrani Yes, f think we should. The beneft to the leckbox system is that it saves us of nost. Wait, let me show rou slide 4 . Stide e4: Evaluation of IH's Proposed tockbox Srstem Average cellectens - 5179,000 Peleased funds - Inceme earned from the released funds = cost of lobbor myiten = RYAN: In coptrast to the existing system, our Pertland bank has offered to create a lockbox system that would involve castamers sending their parments directly to in their region. The banks will process the deposits and then wire the funds to our bank in Fortland. The specifics of the proposal are detailed in slide 3. Slide 3: Costs of FFF's Proposed Lockbox System 1. The average delyr due to float wil be reduced to 3 dars ( 2 dars mail float; no processino float; 1 day clearico float, including the mire tranefor delar). 2. The bank nill eliminate ins current service charges acd fees but will impose a compensating balance of $30,000 an our Portiand account similar balances will not be required in the other sox banks. 3. Funds released by the locbbox system will be invested in marketable securities and will eam an average return of 34 . CFO: So, should we switch from our curnent docontralked v collection srstem to the leckbox system? RYAW: Yes, 1 think we should. The benefit to the lockbor srstem is that it swes us 12 dars of float. Wait, let me show rou slide 4. Stide =4: Traluation of rfF's Proposed Lockbox System Average colfections 5175,000 Released funds - Incorre earned from the released funds - cott of fochbor sintem * Net earnings on the lochbers intem - Net value st the lochbox system wer t Cro: So, now I have three questions Gechtor proposaly that h, how s Finters I And finalik, are there ar. these values, how does the Finace committee know whether to itcommend accepting the fet these values? Secend, should we give up our current system and saitch to the lockbex Is that iff could use instead of a lockbos system to rutiarn antomer funds to the Portland RYAN: In contrast to the existing system, our Portland bank has offered to create a lockbox system that would involve custorners sending their payments directly to in their region. The banks will process the deposits and then wire the funds to our bank in Portland. The specifics of the proposal are detalled in slide 3 Stide a: Costs of HFF's Proposed lockbox System 1. The average delay due to float will be reduced to 3 days (2 days mail float; no processing float; 1 day dearing float, including the wire transfer delay). 2. The bank will eliminate its current service charpes and fees but will impose a compensating balance of $30,000 on our Portland account. Similar balances will not be required in the other six banks. 3. Funds released by the lochbox system will be invested in marketable securities and will earn an average return of 3. Cro: So, should we switch from our current decentralized collection srstem to the lockbox srstam? RYAN Yes, 1 think we should, The benefit to the lockbox srutem is that it saves us of float Wait, let me show you slide 4. Slide \#4: Evaluation of rrF's Proposed tockbox System Average collections =$175,000 Peleased funds - Income earned from the released funds - Cost of lockbox system = Net earnings on the lockbox system - Net value of the lockbox svstem over the current system = Cro: 50, now thave three questions. First, based on the lockbox, proposal? That is, how should we interpret t sytem? And finally, are there any ether methods tha hank arronint? does the Finance Committee know whether to recommend accepting the sond, should we give up our current system and switch to the lockbox instead of a lockbox system to return customer funds to the Portiand