Question : 56.The time between receipt of the payment and its deposit : 1325779

 

 

56.The time between receipt of the payment and its deposit into the firm’s account is

a.mail float.

b.processing float.

c.availability float.

d.clearing float.

 

 

 

57.$100 million dollar days of float could be arrived at by

a.$100 million dollars worth of checks with an average of 5 days of float.

b.$20 million dollars worth of checks with an average of 5 days of float.

c.$10 million dollars worth of checks with an average of 20 days of float.

d.$10 million dollars worth of checks with an average of 5 days of float.

 

 

 

58.A business such as a restaurant, that receives local checks, cash, and debit card payments is more likely to utilize a(n)

a.field-banking system for collections.

b.mail-based system for collections.

c.electronic system for collections.

d.lockbox system for collections.

 

 

 

59.The difference between a lockbox system and a mail-based system is

a.that a mail-based system is more secure.

b.that a lockbox system is really a post office box that is emptied by the firm’s bank.

c.that a lockbox system requires a larger in-house collection system for the firm.

d.none of the above.

 

 

 

60.The Barrell Company is approached by a bank that offers to implement a lockbox system of receipts for the firm. If the new system is implemented, it will reduce float by 6 days per year. If Barrell’s cost of capital is 11.5% and its annual sales are expected to be $10,00,000, then what is the maximum amount that Barrell is willing to pay for the lockbox system?

a.$1,890.41

b.$18,904.11

c.$164,438.56

d.$1,150,000.00

 

 

 

61.Your firm is expected to have $15,000,000 in sales next year and its cost of capital is 13.5%. How many days of float will a lockbox system have to save you in order to pay for a system that will cost your firm $27,740 per year?

a.2 days

b.3 days

c.4 days

d.5 days

 

 

 

 

62.An unsigned check drawn on one of the firm’s bank accounts and deposited in another of the firm’s bank accounts is

a.an automated clearinghouse debit transfer.

b.a depository transfer check.

c.a wire transfer.

d.none of the above.

 

 

 

63.A preauthorized electronic withdrawal for the payer’s account is known as

a.a depository transfer check.

b.an automated clearinghouse debit transfer.

c.a wire transfer.

d.none of the above.

 

 

 

64.You need to decide whether your firm should transfer funds from a deposit account to a transfer account via EDT that will cost $2 or via a wire transfer that will cost $20. It is a Friday so the wire transfer will save you 3 days of float. If your cost of capital is 8%, then how large must the transfer be in order to be indifferent between the wire and the ADT? round to the nearest dollar.

a.$82,125

b.$30,417

c.$27,375

d.$3,042

 

 

 

65.A component of the average payment period is

a.the time from the purchase of raw materials until the firm places the payment in the mail.

b.the time it takes after the firm places its payment in the mail until the supplier has withdrawn funds from the firm’s account.

c.both a and b

d.either a or b

 

 

 

 

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