Question: Dividing of Region. Boston Corporation has an arrangement with XYZ Bank in which the bank handles $5 million a

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Question:
Dividing of Region. Boston Corporation has an arrangement withXYZ Bank in which the bank handles $5 million a day in collectionsbut requires a $420,000 compensating balance. The company isconsidering withdrawing from the arrangement and dividing itssouthern region so that two other banks will handle the businessinstead. Bank S will handle $3 million a day of collections andrequire a $450,000 compensating balance, and bank T will handle theother $2 million a day and require a compensating balance of$350,000. By dividing the southern region, collections will beaccelerated by 1 2 day. The rate of return is 17 percent. Shouldthe southern region be divided?
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