Norma’s Cat Food

Norma’s Cat Food of Shell Knob ships cat food throughout the  country. Norma has determined that through the establishment of local  collection centers around the country, she can speed up the collection  of payments by two and one-half days. Furthermore, the cash management  department of her bank has indicated to her that she can defer her  payments on her accounts by one-half day without affecting suppliers.  The bank has a remote disbursement center in Iow.

a. If the company has $5 million per day in collections and $3  million per day in disbursements, how many dollars will the cash  management system free up?  Justify your answers.

b. If the company can earn 8 percent per annum on freed-up funds, how much will the income be? Justify your answers.

c. If the annual cost of the new system is $800,000, should it be implemented? Explain why or why not.

Turn in your completed work to the Submissions Area through the end of the module.Assignment 2 Grading Criteria Maximum PointsCorrectly  calculated that amount in dollars the cash management system will free  up and justified the response.30Correctly calculated income and  justified response.30Clearly explained if the new system should be  implemented.

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