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(Questions 8-10) XYZ, Inc., has 56 retail clothing outlets scattered throughout the country. Each outlet sends an average of $12,000 daily to the head affice
(Questions 8-10) XYZ, Inc., has 56 retail clothing outlets scattered throughout the country. Each outlet sends an average of $12,000 daily to the head affice in South Bend, Indiana, through checks drawn on local banks. On average, it takes five days before the company's South Bend bank collects the checks. Sitmore and Dolittle is considering an electronic funds transfer arrangement that would completely eliminate the float. Each local bank requires an increase in compensating balances of $20.000 to offset the loss of float. Suppose that the company could earn 5% interest on the net released funds in Question 9. If the cost per electronic transfer were $6 and each store averaged 250 transfers per year, what is the net savings? Hint: net savings = benefits - costs (Assume that the cost of issuing checks on local banks is negligible.) $28,000.00$56,000.00 None of them negative $28,000.00 negative $56,000.00
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