Question
In: Accounting
Metro Bank has 20 branches in the greater Tusla area. Currently, the company has a fairly...
Metro Bank has 20 branches in the greater Tusla area. Currently, the company has a fairly extensive IT department and uses it's own servers to process transactions and store data. The annual budget for IT is $2,500,000. James Baker, the chief financial officer at Metro, is considering outsourcing some of the IT work to CloudTech Services. Baker has a quote from CloudTech for $700,000 per year. He estimates that if he goes with CloudTech he'll have the following savings:
1. The Bank will avoid spending $300,000 to upgrade servers and related software at the start of the next year. The servers have a three-year life with no salvage value and are depreciated using the straight-line method.
2. IT worker salaries will be reduced by $400,000 per year.
3. There will be other miscellaneous savings of $100,000 per year.
Required: Assuming a three-year time horizon and a tax rate of 20%, what is the NPV of outsourcing to CloudTech using a discount rate of 10%? Are there any potential "soft benefits to outsourcing that are not captured in the NPV value analysis? Assume that the $300,000 to upgrade servers is at the start of year 1. The $700,000 expenditure to CloudTech, the savings of IT worker salaries, and other savings are at the end of years 1,2, and 3.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
3. A bank with branches located in a commercial area in Jakarta wants to improve the...
3. A bank with branches located in a commercial area in Jakarta
wants to improve the process for serving customers during the lunch
time period.
Waiting time data was collected from a random sample of 15
customers in Bank branch 1, as follows:
4.21 5.55 3.02 5.13 4.77 2.34 3.54
3.20 4.50 6.10 0.38 5.12 6.46 6.19 3.79
Data was also collected from a random sample of 15 customers in
Bank branch 2, as follows:
9.66 5.90 8.02 5.79 8.73...
3) ABC bank has many branches; XYZ bank has relatively few branches. Both banks are the...
3) ABC bank has many branches; XYZ bank has relatively few
branches. Both banks are the same size - $100 billion in assets -
and operate in a five state region. Compare/contrast likely
differences in the expenses incurred by ABC relative to XYZ.
4) a) What are the reasons for “consolidation” of the financial
services industry? b) When a low-risk firm combines with a
high-risk firm, what can we say about the risk of the conglomerate
relative to that of...
The Bank of Delmarva has branches in Dover and Baltimore. The bank uses a standard credit-rating...
The Bank of Delmarva has branches in Dover and Baltimore. The
bank uses a standard credit-rating system.
Dover: n = 40, sample mean = 43.7, and sample standard deviation
= 16.2.
Baltimore: n = 60, sample mean = 48.2, and sample standard
deviation = 16.5.
(a) At the 0.05 significance level, test the claim that both
populations have the same mean.
Original claim is made by the Answer hypothesis.
Original claim is:
MeanDover-MeanBaltimoreAnswer0.
Test statistic: Answer
Critical value:±Answer
P-value: Answer...
A local bank has two branches, one in Standish and the other in Limerick. To determine...
A local bank has two branches, one in Standish and the other in
Limerick. To determine whether the wait time at the drive-through
was different for the branches, the director of the bank had the
manager at each branch use security camera footage to randomly
select 40 customers who used the drive-through and to determine the
wait time. The average wait time for the sample for the Standish
branch was 93.12 seconds with a standard deviation of 14.65
seconds. The...
The National Bank and Trust Company The National Bank and Trust Company currently employs approximately 1,100...
The National Bank and Trust Company
The National Bank and Trust Company currently employs
approximately 1,100 employees. It presently has fifty branch
offices
*- located throughout the metropolitan area, each of which
employs approximately fourteen individuals (Four supervisory
personnel and ten tellers or clerical employees). The bank expects
to add ten branch offices during the next twelve months, twelve the
following year, and sixteen in the third year. Branches within the
bank differ considerably in size so the figures given...
Within a large metropolitan area, 20% of the commuters currently use the public transportation system, whereas...
Within a large metropolitan area, 20% of the commuters currently
use the public transportation system, whereas the remaining 80%
commute via automobile. The city has recently revitalized and
expanded its public transportation system. It is expected that 6
months from now 30% of those who are now commuting to work via
automobile will switch to public transportation, and 70% will
continue to commute via automobile. At the same time, it is
expected that 90% of those now using public transportation...
You are valuing a bank. The bank currently has assets of $335per share. Five years...
You are valuing a bank. The bank currently has assets of $335
per share. Five years from now (that is, at the end of five years),
you expect their assets per share to be $480. After Year 5, you
expect their assets per share to grow at 3.75 percent per year
forever. The bank has an ROA of 1.6 percent and an ROE of 13.0
percent. The bank's cost of equity is 12.0 percent. What is the
value of the...
A Bank has $100 million in capital, and $900 million of checkable deposit. The bank currently...
A Bank has $100 million in capital, and $900 million of
checkable deposit. The bank currently maintains a total reserve of
$100 million dollars, $200 million in T-bills, and rest in loans. A
new corporate customer opens a checkable deposit account, and
deposit $100 million.
1a. Please show the T-Account of the bank after the deposit?
1b. If the required reserve ratio is 10%, what is likely to
happen?
1c. If the required rate for reserves increase to 11%, what...
A Bank has $100 million in capital, and $900 million of checkable deposit. The bank currently...
A Bank has $100 million in capital, and $900 million of
checkable deposit. The bank currently maintains a total reserve of
$100 million dollars, $200 million in T-bills, and rest in loans. A
new corporate customer opens a checkable deposit account, and
deposit $100 million.
1a. Please show the T-Account of the bank after the deposit?
1b. If the required reserve ratio is 10%, what is likely to
happen?
MVP, Inc., has produced rodeo supplies for over 20 years. The company currently has a debt–equity...
MVP, Inc., has produced rodeo supplies for over 20 years. The
company currently has a debt–equity ratio of 50 percent and is in
the 35 percent tax bracket. The required return on the firm’s
levered equity is 15 percent. MVP is planning to expand its
production capacity. The equipment to be purchased is expected to
generate the following unlevered cash flows:
Year
Cash Flow
0
?$18,200,000
1
5,720,000
2
9,520,000
3
8,820,000
The company has arranged a $9.36...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Suppose you plan to retire in 40 years. If you make 10 annual investments of $...
- PLEASE DONT FORGET TO SOLVE THE ASSIGNMENT QUESTION MOST IMP: Ex1) Download the code from the...
- Customer is saying website is running slow when his end clients are trying to access the...
- Note: The answers to the following questions should be typed in the block of comments in...
- Python Describe the procedure for setting up the display of an image in a window.
- what are the fundamental similarity and differences between gap and dgap?
- Maria Gonzales is a 57-year-old operating room nurse who works full-time at a local hospital. She...
ADVERTISEMENT