Home / Questions / Anne Teak, the financial manager of a furniture manufacturer, is considering operating a l
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $2,500. The bankAc€?cs charge for operating the lock boxes is $.40 a check. The interest rate is .013% per day.
| a-1. |
If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.) |
| Daily interest saved | $ |
| a-2. | Is it worthwhile to adopt the system? | ||||
|
| b. |
What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
| Minimum reduction in time | days |
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