Answer:
a. The amount of dollars will the cash management system free up is $10,220,000
b. The income will be of $1,022,000
Explanation:
a. According to the given data in order to calculate the amount of dollars will the cash management system free up we would have to make the following calculation:
Freed-up fund = $3,200,000 * 3 + $1,240,000 * 1/2
Freed-up fund =
$10,220,000
The amount of dollars will the cash management system free up is $10,220,000
b. To calculate the income If Neon Light Company can earn 10 percent per annum on freed-up funds we would have to make the following calculation:
Interest on freed-up cash = $10,220,000 * 10%
Interest on freed-up cash=$1,022,000
The income will be of $1,022,000
