City Farm Insurance has collection centers across the country to

speed up collections. The company also makes its disbursements from

remote disbursement centers so the firm's checks will take longer

to clear the bank. Collection time has been reduced by three days

and disbursement time increased by one and one$-$half days because of

these policies. Excess funds are being invested in short$-$term

instruments yielding $5$ percent per

annum.$$

$$

a$.$ If City Farm has $$4\mathrm{.}65$ million per day in

collections and $$3\mathrm{.}65$ million per day in disbursements, how many

dollars has the cash management system freed up$?($Enter

your answer in dollars not in millions $($e$.$g$.,$

$$1,234,567).)$Freed$-$up funds $=$b$.$ How much can City Farm earn in dollars per

year on short$-$term investments made possible by the freed$-$up cash?

$($Enter your answer in dollars not in millions $($e$.$g$.,$

$$1,234,567).)$Interest on freed$-$up cash $=$

$$

Answer rating: 100% (QA)

To calculate the amount of funds freed up by the cash management system and the interest ear... View the full answer