Question: Firm OPL has average daily cash inflows Monday through Saturday

Firm OPL has average daily cash inflows (Monday through Saturday) of $15,890, $13,267, $20,654, $24,956, $37,923, and $42,516, respectively. A wire transfer deposits money into a concentration account faster by one day if executed Monday through Thursday and by three days if executed Friday. Assuming that the additional cost of a wire transfer is $15.62 and that OPL has a cost of capital of 16% annually, on which days should wire transfers be considered? (Note: Saturday inflows should be combined with Monday inflows because banks close too early on Saturday to recognize the cash inflow.)

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  • CreatedMarch 26, 2015
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