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Should Polk make the switch and why

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Problem 1: The Polk Corporation is trying to decide whether to switch to a bank that will accommodate electronic funds transfers from Polk's customers. Polk's financial manager believes the new system would decrease its collection float by as much as 7 days. The new bank would require a compensating balance of $28 000, whereas its present bank has no compensating balance requirement. Saban's average daily collections are $11 000, and it can earn 8% on its short-term investments. Should Polk make the switch?

Reference no: EM132760224

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