Mathematics · Cash Management
A logistics firm is deciding between two CMS providers for its Collections. Provider A: Offers a 'Decentralized Model' with 50 collection centers. Average Float: 2 Days. Annual Volume: 500 Crores INR. Total Fee: 0.10% of volume. Provider B: Offers a 'Virtual Account' digital model. Average Float: 0 Days (Real-time). Annual Volume: 500 Crores INR. Total Fee: 0.15% of volume. If the firm's cost of capital is 10% per annum, which provider is cheaper and by how much? (Assume a 360-day year).
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Provider B is cheaper by 10,00,000 INR
- 2Both are equal in cost
- 3Provider B is cheaper by 2,77,778 INR✓
- 4Provider A is cheaper by 5,00,000 INR
Correct answer
Provider B is cheaper by 2,77,778 INR
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