QUESTION 1

1. You are an analyst in the Treasurer's department with Wilson Inc., a multinational corporation with its primary bank account in the U.S. and 3 other secondary accounts at other banks in the U.S. You have been tasked with answering questions for the head of the Department on a few key concerns. Below are the numbers you requested to help in answering the questions.

   U.S. BANKING INFORMATION
   Monthly average ledger balance at U.S. Bank	$3,500,000.00
   Monthly average deposit float	$750,000.00
   Monthly Service Charge_US Bank	$1,000.00
   Earnings Credit Rate_ US Bank	0.007
   Required Reserves Ratio	0.03
   30/365	0.0822
   Wire Transfer Cost	$15
   ACH cost	$0.50
   INFO ON COLLECTIONS FROM CUSTOMERS
   Number of remittances per month	9000
   Average face value of monthly remittances	$25,000.00
   Mail float - in house processing	2
   Processing float - in house processing	2
   Availability float - in house processing	2
   Days float	6
   Per check Variable cost of in-house Processing	0.4
   Fixed Cost of in-house check processing	$2,500.00
   Days float with lockbox alternative	4
   Per check variable cost of lockbox alternative	0.8
   Fixed Cost of lockbox alternative	$3,000.00
   INFO ON DISBURSEMENTS TO SUPPLIERS
   Disbursements per year	3500
   Check cost_ per check	$1.50
   ACH costs_ per check	$0.50
   upfront cost to switch fully to ACH system	$25,000
   DAILY NET CASH FLOWS (10 days into November)
   Day	Net Cash Flow
   1	18000
   2	20000
   3	23000
   4	25000
   5	26000
   6	35000
   7	32000
   8	25000
   9	26000
   10	27000
   MONTHLY SALES FORECASTS INFORMATION
   October sales	$500,000.00
   % of sales collected in month of sale	0.7
   % of sales collected in following month	0.3
   % of sales in Cost of goods sold	0.75
   Monthly lease payment	$125,000.00
   Cash position end of October	$120,000.00
   Target cash balance	$80,000.00
   Sales forecast for November	$450,000.00
   Sales forecast for December	$350,000.00
   MISCELLANEOUS INFO
   Company's Discount Rate	12%

   Question 1: What is the monthly collected balance for Wilson's at it's US bank

   	a.	$3,500,000
   	b.	$2,750,000
   	c.	$1,500,000
   	d.	$2,500,000

4 points

QUESTION 2

1. What is the monthly earnings credit for Wilson's at it's US bank?

   	a.	$1534.73
   	b.	$1123.43
   	c.	$1000.50
   	d.	$750.23

4 points

QUESTION 3

1. What collected balance is required to ensure that Wilson's service charges are always offset by the earnings credit?

   	a.	$1,237,666.45
   	b.	$1,500,250
   	c.	$1,791,850.76
   	d.	$1,915,000.25

4 points

QUESTION 4

1. Suppose a second bank offers Wilsons an earnings credit rate of .90%. What would be the difference in the earnings credits between the 2 banks?

   	a.	$300.00
   	b.	$438.49
   	c.	$1973.22
   	d.	None of the above

4 points

QUESTION 5

1. The company wants to start transferring funds to their other banks in order to reduce the opportunity costs of idle funds. As they consider which transfer method to use, which of the following factors would decrease the minimum transfer amount to justify using the wire transfer method?

   	a.	Decrease in the cost of a wire
   	b.	Decrease in the opportunity cost of funds
   	c.	Decrease in the cost of an ACH
   	d.	Increase in the cost of a wire

4 points

QUESTION 6

1. What is the minimum transfer balance that justifies a wire transfer?

   	a.	approximately $26,750
   	b.	approximately $46,750
   	c.	approximately $125,550
   	d.	None of the options.

4 points

QUESTION 7

1. What is the cost of using the internal collections system for collecting remittances from customers?

   	a.	approximately $450,000
   	b.	approximately $350,000
   	c.	approximately $250,000
   	d.	approximately $1450,000

4 points

QUESTION 8

1. What is the cost of using the lockbox alternative?

   	a.	approximately $254,000
   	b.	approximately $501,000
   	c.	approximately $306,000
   	d.	approximately $901,000

They go together, please help