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Spontaneous sources of funds, accruals When Tallman Haberdashery, Inc., merged with Meyers Mens Suits, Inc., Tallmans employees were switched from a weekly to a biweekly pay period. Tallmans weekly payroll amounted to $860,000. The cost of funds for the combined firms is 13%. What annual savings, if any, are realized by this change of pay period? The annual savings that the firm can realize is s(Round to the nearest dollar.)

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Assuming 52 weeks in a year, we have - Weekly payroll Weekly interest rate No. of weeks $860,000 <-- 860000 0.25% < 13%/52 4 52<- -52 6 Present cost of weekly payroll $41,886,164 <-- =-PV(B3,B4,B2,0) Biweekly payroll Biweekly interest rate No. of Biweeks 8 $1,720,000860000* 2 0.50% <-- =(13%/52)*2 26<52/2 Present cost of weekly payroll $41,837,311 <- -PV(B9,B10,B8,0) 13 Annual Savings $48,853 <- B6-B12

answered by: ANURANJAN SARSAM
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