Use the following assumptions to determine the monthly earnings credit:
Ledger Balance = $550,000
Deposit Float = $100,000
Earnings Creedit Rate = 0.50%
Days in month = 30 days
Reserve Requirement Ratio = 10%
A firm can convert from a paper-based system to an ACH system for a cost of $20,000. There would, however, be a savings of $0.95 on each check and the company expects 2,500 disbursements for the year. The firm's opportunity cost is 8%. Assuming the company will be operating for the forseeable future, what is the project's NPV?
The Williams Company can convert to ACH disbursing for $20,000. Williams is expected to average a perpetual 5,000 checks per year. ACH disbursing will save Williams $0.20 per payment. Using a discount rate of 10%, what is the minimum number of annual payments required to justify the cost to convert to ACH disbursing?
A discounted money market security has just been issued. It has a 6 month maturity (180 days), a face value of $20,000 and a discount rate of 3%. What is its money market yield?
Joe Smith, the Treasurer for the ABC Company, has just discovered that in a few weeks his firm will suffer a cash shortage of $10,000,000 for 60 days. A dealer has told him that commercial paper for 60 days now has a cost of 2.8%. The dealer's annual fee is 0.15% and the commitment fee for a back-up line of credit would be 0.25%. What is the effective cost of the commercial paper, i.e., what rate can Joe Smith expect to pay to cover the shortfall?
Your firm is located in the U.S. and a major customer is located in Europe. Due to historical negotiations, your customers pay your firm in euros. Your firm has just recorded a sale to the customer for 50,000,000 euros. The customer has 30 days to pay the invoice. The current spot rate is 1 euro = $1.38. The foreign exchange expert at your firm believes that the foreign exchange rate in 30 days will either be 1 euro = $1.10 or 1 euro = $1.50. Assume that the U.S. dollar depreciates, what is the expected U.S. dollar value of this sale at the future exchange rate?