Question: 1. GHI Company is currently using an EDT Transfer for most of its movement of funds from deposit accounts to its concentration account at a cost of $1.00 per transfer. A wire transfer option is available at a total cost of $15. If the cost of capital is 3.5%, what would be the minimum amount that should be wired during the middle of the week?
2. Using the transfer cost information from the Problem 4 and assuming GHI is a net investor in the short-term, what must GHI be able to earn on a short-term investment in order to make it worthwhile to wire transfer $50,000 on a Friday, rather than use the an EDT?