Question: Dividing of Region. Boston Corporation has an arrangement with XYZ Bank in which the bank handles $5 million a
Posted: Wed Jul 06, 2022 6:28 pm
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?
Please proper explain and do not copy from answers. Otherwise ihave to report the answer.
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?
Please proper explain and do not copy from answers. Otherwise ihave to report the answer.