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In: Finance
No More Books Corporation has an agreement with Floyd Bank, whereby the bank handles $7 million...
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No More Books Corporation has an agreement with Floyd Bank, whereby the bank handles $7 million in collections a day and requires a $450,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its Eastern region so that two other banks will handle its business. Banks A and B will each handle $3.5 million of collections a day, and each requires a compensating balance of $300,000. No More Books’ financial management expects that collections will be accelerated by one day if the Eastern region is divided. |
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What is the NPV of accepting the system? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) |
| What will be the annual net savings? Assume that the T-bill rate is 2.6 percent annually. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) |
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jeff jeffy answered 1 year agoRelated Solutions
No More Books Corporation has an agreement with Floyd Bank whereby the bank handles $6.8 million...
No More Books Corporation has an agreement with Floyd Bank
whereby the bank handles $6.8 million in collections per day and
requires a $440,000 compensating balance. No More Books is
contemplating canceling the agreement and dividing its eastern
region so that two other banks will handle its business. Banks A
and B will each handle $3.4 million of collections per day, and
each requires a compensating balance of $290,000. No More Books’
financial management expects that collections will be accelerated...
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A Bank has $100 million in capital, and $900 million of checkable deposit. The bank currently...
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