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Bank with the second bank

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Your firm has a monthly ledger balance of $2,000,000 and deposit float of $500,000. The first Bank offers your firm an earnings credit rate of 0.60%. Meanwhile, the second bank offers your firm an earnings credit rate of 0.40%. The reserve requirement ration is 10% and the typical month has 30 days. During the typical month, how much worse of would the firm be if management chooses to bank with the second Bank, relative to the first Bank?

Reference no: EM132245163

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