Jane Marks has a restaurant in which she accepts credit cards and checks.Several of the places that Jane shops now accept debit cards and do notaccept checks. Jane’s banker explained that a debit card would immediatelytransfer money into her account, but it would cost $50 per monthfor the equipment and bank charges. Although she requires proper identification,Jane loses approximately $590 a year as a result of bad checks.She also determined that on average, she loses 115 days of interest onall checks because the banks are closed on 11 holidays and weekends (52 weeks * 2 weekend days = 104 + 11 holidays). Jane currently earns3 percent interest on her bank accounts and accepts an average of $2,000 aday in checks.a. What is the total annual cost to Jane for the debit card service?b. What is the benefit?c. Should Jane implement the system?
Jane Marks has a restaurant in which she accepts credit cards and checks.
Several of the places that Jane shops now accept debit cards and do not
accept checks. Jane’s banker explained that a debit card would immediately
transfer money into her account, but it would cost $50 per month
for the equipment and bank charges. Although she requires proper identification,
Jane loses approximately $590 a year as a result of bad checks.
She also determined that on average, she loses 115 days of interest on
all checks because the banks are closed on 11 holidays and weekends
(52 weeks * 2 weekend days = 104 + 11 holidays). Jane currently earns
3 percent interest on her bank accounts and accepts an average of $2,000 a
day in checks.
a. What is the total annual cost to Jane for the debit card service?
b. What is the benefit?
c. Should Jane implement the system?
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