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CHAPTER 26 CASE C-1
CHAPTER 27
CASH MANAGEMENT AT RICHMOND
CORP.
1. The amount the company will have available is the future value of the transfers, which are an
annuity. The amount of each transfer is one minus the wire transfer cost, times the number of
transfers, which is four since there are four banks, times the amount of each transfer. So, the total
available in two weeks will be:
2. The bank will accept the ACH transfers from the four different banks, so the company incurs a
transfer fee from each collection center. The future value of the deposits will now be:
3. To find the cost at which the company is indifferent, we set the amount available we found in
Question 1 equal to the cost equation we used in Question 2. Setting up this equation where X stands
for the ACH transfer cost, we find:
