Your banker has analyzed your company account and has suggested that her bank has a cash management package for you. She suggests that with a concentration banking system, your float can be reduced by four days on average. You, of course, are delighted (youre not sure why), but you do know your average daily collections amount to $390,000. Your opportunity cost of funds is 8 percent. The bank provides this service for $61,000 plus a compensating balance in your current account of $83,500. (A compensating balance is the amount you are required to maintain interest free at that bank.)

What is the net funds freed up?	Answer 1Choose...A good ideaA bad idea$1,476,500$128,000$61,000$118,120$1,560,000$57,120$124,800
What is the annual savings for the company?	Answer 2Choose...A good ideaA bad idea$1,476,500$128,000$61,000$118,120$1,560,000$57,120$124,800
What is the net benefit of concentration banking?	Answer 3Choose...A good ideaA bad idea$1,476,500$128,000$61,000$118,120$1,560,000$57,120$124,800
Is the package a good or a bad idea?	Answer 4Choose...A good ideaA bad idea$1,476,500$128,000$61,000$118,120$1,560,000$57,120$124,800