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    caynaashe's Avatar
    caynaashe Posts: 1, Reputation: 1
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    #1

    May 19, 2012, 09:37 PM
    Nicolas birdcage company of hollywood ships cages through out thr countrry
    Cost-benefit analysis of cash management Nicholas Birdcage Company of Hollywood ships cages throughout the country. Nicholas has determined that through the establishment of local collection centers around the country, he can speed up the collection of payments by one and one-half days. Furthermore, the cash management department of his bank has indicated to him that he can defer his payments on his accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Florida. A. If the company has $4 million per day in collections and $2 million per day in disbursements, how many dollars will the cash management system free up? B. If the company can earn 9 percent per annum on freed-up funds, how much will the income be? C. If the total cost of the new system is $700,000, should it be implemented?
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 173
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    #2

    May 20, 2012, 01:46 AM
    Quote Originally Posted by caynaashe View Post
    Cost-benefit analysis of cash management Nicholas Birdcage Company of Hollywood ships cages throughout the country. Nicholas has determined that through the establishment of local collection centers around the country, he can speed up the collection of payments by one and one-half days. Furthermore, the cash management department of his bank has indicated to him that he can defer his payments on his accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Florida. A. If the company has $4 million per day in collections and $2 million per day in disbursements, how many dollars will the cash management system free up? B. If the company can earn 9 percent per annum on freed-up funds, how much will the income be? C. If the total cost of the new system is $700,000, should it be implemented?
    I find there are some missing logic here freeing $2million a day for half a day is going to yield (.09/2) *2,000,000 a very small saving even doubling or trebi;ling it does make the project even get a second look

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