As pointed out earlier in Heres the Real Kicker, Kicker changed banks a couple of years ago
Question:
Checking accounts needed: ................6
Checks per month:* ..................2,000
Foreign debits/ credits on checking accounts per month: .....200
Deposits per month:* ..................300
Returned checks:* .....................25 per month
Credit card charges per month: ..............4,000
Wire transfers per month: 100, of which 60 are to foreign bank accounts
Monthly credit needs (line of credit availability and cost): $ 100,000 average monthly usage
Internet banking services?
Knowledgeable loan officer?
Responsiveness of bank?
FirstBank Bid: Checking accounts: $ 5 monthly maintenance fee per account
$ 0.10 foreign debit/ credit
$ 0.50 earned for each deposit
$ 3 per returned check
Credit card fees: $ 0.50 per item
Wire transfers: $ 15 to domestic bank accounts, $ 50 to foreign bank accounts
Line of credit: Yes, this amount is available,
interest charged at prime plus 2 percent,
subject to a 6 percent minimum interest rate
Internet banking services? Yes, full online banking available:
$ 15 one-time setup fee for each account,
$ 20 monthly fee for software module
The loan officer assigned to the potential Kicker account had 10 years of experience with medium to large business banking and showed an understanding of the audio industry.
Community Bank Bid:
Checking accounts: No fees for the accounts, and no credits earned on deposits;
$ 2.00 per returned check
Credit card fees: $ 0.50 per item, $ 7 per batch processed.
Only manual processing was available, and
Kicker estimated 20 batches per month
Wire transfers: $ 30 per wire transfer
Line of credit: Yes, this amount is available,
Interest charged at prime plus 2 percent,
Subject to a 7 percent minimum interest rate
Internet banking services? Not currently, but within the next six months
The loan officer assigned to the potential Kicker account had four years of experience with medium to large business banking, none of which pertained to the audio industry.
RegionalOne Bank Bid:
Checking accounts: $ 5 monthly maintenance fee per account to be waived for Kicker
$ 0.20 foreign debit/credit
$ 0.30 earned for each deposit
$ 3.80 per returned check
Credit card fees: $ 0.50 per item
Wire transfers: $ 10 to domestic bank accounts, $ 55 to foreign bank accounts
Line of credit: Yes, this amount is available, interest charged at prime plus 2 percent, subject to a 6.5 percent minimum interest rate
Internet banking services? Yes, full online banking available, one- time setup fee for each account waived for Kicker $ 20 monthly fee for software module
The loan officer assigned to the potential Kicker account had two years of experience with large business banking. Another branch of the bank had expertise in the audio industry and would be willing to help as needed. This bank was the first one to submit a bid.
Required:
1. Calculate the predicted monthly cost of banking with each bank.
2. Suppose Kicker felt that full online Internet banking was critical. How would that affect your analysis from Requirement 1? How would you incorporate the subjective factors (e. g., experience, access to expertise)?
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Related Book For
Cornerstones of Financial and Managerial Accounting
ISBN: 978-1111879044
2nd edition
Authors: Rich, Jeff Jones, Dan Heitger, Maryanne Mowen, Don Hansen
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