The Saban Corporation is trying to decide whether to switch to a bank that will accommodate electronic funds transfers from Saban's customers. Saban's financial manager believes the new system would decrease its collection float by as much as 7days. The new bank would require a compensating balance of 28,000, whereas its present bank has no compensating balance requirement. Saban's average daily collections are $10,600,and it can earn 8.4% on its short-term investments. Should Saban make the switch? (Assume the compensating balance at the new bank will be deposited in a non-interest-earning account.)

As a result of using the electronic funds transfer system, the amount of collection float freed up is..? (Round to the nearest dollar.)

The amount that is immediately available to Saban Corporation is $...?(Round to the nearest dollar.)

Saban should... banks.

a. switch

b. not switch