Answer:
A. $7,275,000
B. $436,500
C. YES
Explanation:
A. Calculation for how many dollars will the cash management system free up
First step is to calculate for Additional collections
Using this formula
Additional collections=Daily collections× Numbers of days to speed up
Let plug in the formula
Additional collections= $2,250,000 million per day × 3 days speed up
Additional collections=$6,750,000
Second step is to calculate for delayed disbursements using this formula
Delayed disbursements= Daily disbursement × Numbers of Days for slow down
Let plug in the formula
Delayed disbursements= $1,050,000 million per day ×0.5
Delayed disbursements= 525,000
Last step is to calculate for the freed up fund using this formula
Freed up fund=Additional collections+Delayed disbursements
Let plug in the formula
Freed up fund=$6,750,000 + 525,000
Freed up fund=$7,275,000
Therefore the amount of dollars that the cash management system will free up is $7,275,000
B. Calculation for how much will the income be using this formula
Income =Freed up fund× Interest rate
Let plug in the formula
Income=$7,275,000×6%
Income=$436,500
Therefore the income amount will be $436,500
C. YES it should be implemented reason be that the income amount of $436,500 is $36,500 ($435,600- $400,000) higher than New system total cost of the amount of $400,000
