Determining annual pretax return


Q1) Slimware is thinking of establishing a zero-balance system for its payroll account. Presently, firm pays its hourly employees every week on late Friday afternoon and puts check for $750,000 in bank to cover payroll each Monday morning. Slimware has find out that checks clear its bank as follows:

Day Percent clearing
Monday 26%
Tuesday 51%
Wednesday 14%
Thursday 7%
Friday 2%

Determine annual pretax return to Slimware if firm can earn 9% on any funds released from employing zero-balance system? Suppose company has 52 weekly pay periods each year.

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Accounting Basics: Determining annual pretax return
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