Question
Scott, the treasury manager of Weiland Inc., is in the process of developing cash transfer rules for the firm. Currently, the firms bank charges $15
Scott, the treasury manager of Weiland Inc., is in the process of developing cash transfer rules for the firm. Currently, the firm’s bank charges $15 per wire and $.50 per EDT. That EDT takes one day longer to clear. Scott believes that the firm’s current investment opportunity rate is 4%. The firm does not currently earn earnings credit on account balances.
Suppose that Scott has negotiated an ECR of 0.5% on account balances (the RRR is 10%). What is the minimum transfer balance that justifies a wire transfer?
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Introduction to Corporate Finance What Companies Do
Authors: John Graham, Scott Smart
3rd edition
9781111532611, 1111222282, 1111532613, 978-1111222284
