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.)
|
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 |
Abhinav
02-Dec-2019