Your Cash Manager Is Currently Using Wire Transfer to Obtain

question 88

Multiple Choice

Your cash manager is currently using wire transfer to obtain collections from distant locations each time that the cash accumulates to $50,000.Evaluate the financial logic of this policy if the wire transfer costs $20, saves three days of mail time, and interest rates average 7 percent annually.

• A)Stop the policy; $8.77 is lost with each transfer
• B)Stop the policy unless the transfer amount is increased to approximately $65,200
• C)Continue the policy at the current transfer amount
• D)Improve policy by reducing transfer amount to $34,800 break-even wire transfer = 3 days x (7%/365) x $50,000 = $28.77
• $28)77 > $20

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Definitions:

Lion Capital

The top part of an Ashokan pillar, famously known as the national emblem of India, featuring four lions standing back to back.

Ashoka

was an ancient Indian emperor of the Maurya Dynasty, who ruled the Indian subcontinent from c. 268 to 232 BCE, known for his conversion to Buddhism and spreading Buddhist principles.

Upanishads

South Asian religious texts of ca. 800–500 BC that introduced the concepts of samsara, karma, and moksha.

Rebirths

Conceptual or spiritual renewals or transformations, often referring to ideas of reincarnation in religions or metaphorical new beginnings.