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The cash manager of Bronco is contemplating the choices between using wire transfer and EDT. She estimates that her investment opportunity rate is 10%. The bank’s ECR is currently 7 percent and the reserve requirement is 10%. Her bank account officer informs her that a wire transfer will cost $ 20 and will provide collected balances one day earlier than the EDT which cost$ .75. Further, assume that the transfer will occur during the mid of the week. Create or write the formulas in the spreadsheet and show your work at arriving at your solutions. When click on the cell contain the answer the formula as to appear. very important to obtain credit for the question.
a. Assume that the balance transferred are above the balance required to compensate the deposit bank for its services. Calculate the minimum transfer balance required to justify the use of a wire transfer.
b. Assume that the balances transferred are below the balances required to compensate the deposit bank. Calculate the minimum transfer balance to justify the use of a wire transfer.
c. Why are the answers in two preceding parts different?
Please show formulas,
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