Q6: 13. The First American Bank of Rapid City has one outsidedrive-up teller. It takes the teller an average of 4 minutes to serve abank customer. Customers arrive at the drive-up window at a rateof 12hour. The bank operations officer is currently analyzingthe possibility of adding a second drive-up window, at an annualcost of $20,000. It is assumed that arriving cars would be equallyperdivided between both windows. The operations officer estimatesthat each minute's reduction in customer waiting time wouldincrease the bank's revenue by $2,000 annually. Should the seconddrive-up window be installed?Q7:23. A vending machine at City Airport dispenses hot coffee, hotloteor hot tea in a constant service time of 20 seconds.

Current average serving time = 4 minutes Service Rate per hour =12$/ hr Cost of new drive up…

Q6: 13. The First American Bank of Rapid City has one outside drive-up teller. It takes the teller an average of 4 minutes to serve a bank customer. Customers arrive at the drive-up window at a rate of 12 per hour. The bank operations officer is currently analyzing the possibility of adding a second drive-up window, at an annual cost of $20,000. It is assumed that arriving cars would be equally divided between both windows. The operations officer estimates that each minute's reduction in customer waiting time would increase the bank's revenue by $2,000 annually. Should the second drive-up window be installed? coffee bot

Q6: 13. The First American Bank of Rapid City has one outside drive-up teller. It takes the teller an average of 4 minutes to serve a bank customer. Customers arrive at the drive-up window at a rate of 12 per hour. The bank operations officer is currently analyzing the possibility of adding a second drive-up window, at an annual cost of $20,000. It is assumed that arriving cars would be equally divided between both windows. The operations officer estimates that each minute's reduction in customer waiting time would increase the bank's revenue by $2,000 annually. Should the second drive-up window be installed? coffee bot

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Your firm has an average receipt size of $155. A bank has approached you concerning a lockbox service that will decrease your total collection time by one day. You typically receive 5,700 checks per day. The daily interest rate is 0.018 percent. The bank charges a lockbox fee of $115 per day. What is the NPV of accepting the lockbox agreement? (Round your answer to 2 decimal places. (e.g., 32.16)) NPV $ What would the net annual savings be if the service were adopted? (Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Net annual savings $.
7. A retailer firm operates in several cities within the country. The individual store managers deposit daily collections at a local bank in a non-interest bearing checking account. Twice per week, the local bank issues a depository transfer check (DTC) to the central bank at headquarters. The firm's controller is considering the use of a wire transfer. The additional cost of each transfer would be P25 but collections will be accelerated by 2 days. The annual interest paid by the central bank is 7.2% (.02% a day). Assuming 350 days in a year, at what amount of pesos transferred would it be economically feasible to use a wire transfer instead of the DTC? A. it would never be economically feasible B. any amount greater than P173 C. P125,000 and above D. above P62,500
4. ABC Co. has received proposals from several banks to establish a lockbox system to speed up receipts. The firm receives an average of 700 checks per day averaging P1, 800 each and its cost of short term funds is 7% per year. If all proposals will produce equivalent processing results, which bank proposed charges is best 2 be adopted? A. A fee of .03% of the amount collected B. P.50 fee per check C. a compensating balance of P1, 750, 000 D. a flat fee of P125, 000 a year
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $3,500. The bank’s charge for operating the lock boxes is $0.50 a check. The interest rate is 0.011% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $3,500. The bank’s charge for operating the lock boxes is $0.50 a check. The interest rate is 0.011% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)
Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 880 $830 $.10 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely…
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 400 payments a day will be made to lock boxes with an average payment size of $3,000. The bank's charge for operating the lock boxes is $0.50 a check. The interest rate is 0.012% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. Note: Do not round intermediate calculations. b. Is it worthwhile to adopt the system? c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. a. Net daily advantage b. Is it worthwhile to adopt the system? c. Minimum reduction in time $ Yes (56) 1.39 days
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 800 payments a day will be made to lock boxes with an average payment size of $3,000. The bank’s charge for operating the lock boxes is $0.50 a check. The interest rate is 0.015% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) b. Is it worthwhile to adopt the system? (Yes/No) c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
1. You want to open a checking account with a $500 deposit. You estimate you will write 10 checks a month and use an ATM from other banks about twice a week. Bank A charges $1 per check if you drop under a minimum balance of $100, but you can use another bank's ATM without a fee. Bank B has free checking but charges $1 each time you use another bank's ATM. Calculate the difference in fees between the two banks over the course of one year for the following scenarios: a. Your balance slips below $100 every other month. b. Your balance slips below $100 every other month, but you are now able to pay a bill online each month, dropping the number of checks you have to write to nine monthly. You also find you are only using the other bank's ATM about once a week. c. You maintain a minimum balance of $500, write three checks a week, and use another bank's ATM only about once a month.
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 300 payments a day will be made to lock boxes with an average payment size of $2,000. The bank’s charge for operating the lock boxes is $0.40 a check. The interest rate is 0.011% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) Net Daily Advantage _________________ b. Is it worthwhile to adopt the system? Yes No c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities 850 $ 800 $.10 a. NPV b. NPV 3.2% a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge that there is an annual fixed charge of $3,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 600 payments a day will be made to lock boxes with an average payment size of $2,000. The bank’s charge for operating the lock boxes is $0.30 a check. The interest rate is 0.011% per day. a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) b. Is it worthwhile to adopt the system? multiple choice Yes No c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Bird's Eye Treehouses, Incorporated, a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. Therefore, it is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Effective annual rate on money market securities 825 $745 $.15 a. NPV b. NPV 5.5% The total collection time will be reduced by three days if the lockbox system is adopted. a. What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose in addition to the variable charge, there is an annual fixed charge of $5,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer…