Question 1: A company's weekly cash position is as follows:
Week 1 $24,000
Week 2 $34,000
Week 3 $10,000
Week 4 $15,000
The annual interest rate for investments is 12% what return can the company earn on these weekly investments.
Question 2: A company with most of its customers in New York, has decided to consider using a lock box to help improve it's cash flow. The bank has indicated it will be able to reduce the company's collection float by 3 days. Given the following details should the lock box option be used
- Average number of payments per day in new York is 150
- Average value of each payment is $15,000
- Fixed annual lock box fee is $80,000
- Transactional fee for lock box use is $.50 per payment
- Money market Investment has a interest rate of 7.5%