After performing a regression analysis on the average length of disbursement float on checks paid to vendors, a company developed the distribution forecast in the table below. Assume that checks totaling $300,000 were mailed to arrive at vendors doors by Wednesday, June 26. The cash manager will need to fund the disbursement account to cover the value of the checks being distributed. She could fund the full $300,000 on Wednesday; however, she would like to minimize the amount in the account, especially over the weekend. With that goal in mind, and with the information from the distribution forecast, the cash manager plans to only partially fund the disbursement account on Wednesday. To protect against overdrafts while minimizing the idle balances in the account, on Wednesday the cash manager will fund an amount which is 30% greater than the amount needed to cover clearings forecasted for Wednesday through Friday. The balance will be funded the following Monday.

Date Business Days After Day of the Percent of Dollars Distribution Week Clearing June 26 1 Wednesday 3% June 27 Thursday 10% June 28 3 Friday 10%- July 1 4. Monday 42% July 2 5 Tuesday 20% July 3 6 Wednesday 15% Total 100% A. How much will the cash manager deposit into the account on Monday morning? O WN *** B. Assuming the company's opportunity cost is 7.5% p.a., how much did the company save by delaying part of the funding of the account until Monday? Date Business Days After Day of the Percent of Dollars Distribution Week Clearing June 26 1 Wednesday 3% June 27 Thursday 10% June 28 3 Friday 10%- July 1 4. Monday 42% July 2 5 Tuesday 20% July 3 6 Wednesday 15% Total 100% A. How much will the cash manager deposit into the account on Monday morning? O WN *** B. Assuming the company's opportunity cost is 7.5% p.a., how much did the company save by delaying part of the funding of the account until Monday?