Theo's Bar & Grill needs $153,000 a week to pay bills. The standard deviation of the weekly disbursements is $9,600.

Theo's Bar & Grill needs $153,000 a week to pay bills. The standard deviation of the weekly disbursements is $9,600. The firm has established a lower cash balance limit of $40,000. The applicable interest rate is 3.5 percent and the fixed cost of transferring funds is $40. Based on the BAT model, what is the optimal average cash balance?    A.  $36,199 B.  $49,568 C.  $67,426 D.  $99,136 E.  $112,400

76.

Parkway Express needs $318,000 a week to pay bills. The standard deviation of the weekly disbursements is $31,000. The firm has established a lower cash balance limit of $60,000. The applicable interest rate is 4.5 percent and the fixed cost of transferring funds is $65. Based on the BAT model, what is the opportunity cost of holding cash?    A.  $3,873 B.  $4,918 C.  $5,207 D.  $109,283 E.  $110,440

77.

Penco Supply spends $325,000 a week to pay bills and maintains a lower cash balance limit of $75,000. The standard deviation of its disbursements is $18,900. The applicable interest rate is 5 percent and the fixed cost of transferring funds is $65. What is the firm's optimal initial cash balance based on the BAT model?    A.  $150,600 B.  $158,929 C.  $170,096 D.  $221,506 E.  $209,619

78.

Your firm spends $54,000 a week to pay bills and maintains a lower cash balance limit of $45,000. The standard deviation of your disbursements is $12,100. The applicable interest rate is 4.5 percent and the fixed cost of transferring funds is $55. What is your opportunity cost of holding cash based on the BAT model?    A.  $1,318 B.  $1,864 C.  $2,204 D.  $2,311

Rosewell International receives an average of 268 checks a day with an average amount per check of $780

You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 1.3 days. On an average day, your firm receives 136 checks with an average value of $219 each. The daily interest rate on Treasury bills is 0.021 percent. The bank charge per check is $0.26. What is the anticipated daily cost of the lockbox system?    A.  $3.48 B.  $6.25 C.  $12.60 D.  $35.36 E.  $36.17 Daily cost = 136 × $0.26 = $35.36

72.

You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 2.8 days. On an average day, your firm receives 2,419 checks with an average value of $1,287 each. The daily interest rate on Treasury bills is 0.016 percent. The bank charge per check is $0.30. What is the net present value of this lockbox arrangement?    A.  -$4,535,625 B.  -$2,611,575 C.  $187,419 D.  $4,181,483 E.  $13,252,733 Net present value = [2,419 × $1,287 × 2.8] - [(2,419 × $0.30)/.00016] = $4,181,483

73.

Rosewell International receives an average of 268 checks a day with an average amount per check of $780. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 1.4 days. The bank charges $0.21 a check for this service. The daily interest rate on Treasury bills is 0.02 percent. What is the net present value of this lockbox arrangement?    A.  -$61,640 B.  -$11,256 C.  $11,256 D.  $30,820 E.  $61,640 Net present value = [268 × $780 × 1.4] - [(268 × $0.21)/.0002] = $11,256

74.

The Eliot Co. needs $185,000 a week to pay bills. The standard deviation of the weekly disbursements is $17,600. The firm has established a lower cash balance limit of $75,000. The applicable interest rate is 5.5 percent and the fixed cost of transferring funds is $47. Based on the BAT model, what is the optimal initial cash balance?    A.  $90,668 B.  $97,515 C.  $104,141 D.  $128,224 E.  $136,509

Currently, your firm requires 2 days to process the checks which customers mail in to pay for their credit purchases

Currently, your firm requires 2 days to process the checks which customers mail in to pay for their credit purchases. The average mail time associated with these payments is 3.4 days and the check clearing time is 2.1 days. If your firm adopts a lockbox system, the mail time will be cut in half. In addition, if employees are reassigned, checks could be processed the same day they are received. How long will your collection time be if both the lockbox system and the job reassignments are implemented?    A.  3.85 days B.  4.10 days C.  4.80 days D.  4.90 days E.  5.55 days Collection time = (3.4 × 0.5) + 1 + 2.1 = 4.80 days

68.

You are considering implementing a lockbox system for your firm. The system is expected to reduce the average collection time by 1.2 days. On an average day, your firm receives 320 checks with an average value of $99 each. The daily interest rate on Treasury bills is 0.014 percent. What is the anticipated amount of the daily savings if this system is implemented?    A.  $2.61 B.  $3.29 C.  $4.45 D.  $5.32 E.  $5.78 Daily savings = 320 × $99 × 1.2 × 0.00014 = $5.32

69.

Roger's Distributors receives an average of 310 checks a day. The average amount per check is $629. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 1.5 days. The daily interest rate on Treasury bills is 0.011 percent. What is the amount of the expected daily savings of the lockbox system?    A.  $2.04 B.  $6.92 C.  $14.95 D.  $22.42 E.  $32.17 Daily savings = 310 × $629 × 1.5 × 0.00011 = $32.17

70.

Hand Tools, Inc. receives an average of 611 checks a day. The average amount per check is $425. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 1 day. The bank charges $0.275 a check for this service. The daily interest rate on Treasury bills is 0.013 percent. What is the average daily cost of the lockbox system?    A.  $31.16 B.  $54.19 C.  $168.03 D.  $180.11 E.  $199.19 Daily cost = 611 × $0.275 = $168.03

Hoyes Lumber generally receives 3 checks a month. The check amounts and the collection delay for each check are shown below

Your firm generally receives 4 checks a month. The check amounts and the collection delay for each check is shown below. Given this information what is the amount of the average daily float? Assume a 30 day month.        A.  $1,120 B.  $2,333 C.  $2,640 D.  $2,900 E.  $3,416 Average daily float = [($1,500 × 2) + ($3,900 × 1) + ($6,100 × 3) + ($4,200 × 2)]/30 = $1,120

52.

Hoyes Lumber generally receives 3 checks a month. The check amounts and the collection delay for each check are shown below. Given this information, what is the amount of the average daily float? Assume each month has 30 days.        A.  $1,386.67 B.  $1,407.19 C.  $4,750.00 D.  $6,833.33 E.  $6,933.33 Average daily float = [($6,100 × 3) + ($5,500 × 1) + ($8,900 × 2)]/30 = $1,386.67

53.

The Blue Star generally receives only 3 checks a month. The check amounts and the collection delay for each check are shown below. Given this information, what is the amount of the average daily float? Assume every month has 30 days.        A.  $971.43 B.  $1,376.67 C.  $3,351.33 D.  $5,666.67 E.  $6,800.00 Average daily float = [($8,800 × 2) + ($2,300 × 3) + ($8,400 × 2]/30 = $1,376.67

54.

The Food Wholesaler generally receives 4 checks a month. The check amounts and the collection delay for each check are shown below. Given this information, what is the amount of the average daily float? Assume every month has 30 days.        A.  $3,963.89 B.  $21,750.00 C.  $22,236.67 D.  $28,133.33 E.  $35,675.00 Average daily float = [($67,200 × 3) + ($91,600 × 1) + ($54,200 × 2) + ($88,500 × 3)]/30 = $22,236.67