Ahlam Mansoor, an assistant manager at a local department store, gets paid every 2 weeks by direct deposit into her checking ac­ count. This account pays no interest and has no minimum balance requirement. Her monthly income is US$4,200. Ahlam has a 'target' cash balance of around US$1,200, and whenever it exceeds that amount she transfers the excess into her savings account, which currently pays 2.0 percent annual interest. Her current savings balance is US$15,000, and Ahlam estimates she transfers about US$500 per month from her checking account into her savings account. Ahlam doesn't waste any time in paying her bills, and her monthly bills average about US$2,000. Her monthly cash outlay for food, fuel, and other sundry items totals about US$850. Reviewing her payment habits indicates that on average she pays her bills 9 days early. At this time, most marketable securities are yielding about 4.75 percent annual interest. Show how Ahlam can better manage her cash balance:

a. What can Ahlam do regarding the handling of her current balances?

b. What do you suggest that she do with her monthly surpluses?

c. What do you suggest Ahlam do about the manner in which she pays her bills?

d. Can Ahlam grow her earnings by better managing her cash balances? Show your work.