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It takes Cookie Cutter ModularHomes, Inc., about six days to receive and deposit checks fr

It takes Cookie Cutter ModularHomes, Inc., about six days to receive and deposit checks fr

It takes Cookie Cutter ModularHomes, Inc., about six days to receive and deposit checks fromcustomers. Cookie Cutter?s management is considering a lockboxsystem to reduce the firm?s collection times. It is expected thatthe lockbox system will reduce receipt and deposit times to threedays total. Average daily collections are $129,000, and therequired rate of return is 4 percent per year. Assume 365 days peryear.

 

a.

What is the reduction inoutstanding cash balances as a result of implementing the lockboxsystem?

 

 

Cash balance reduction

$

 

 

b.

What is the daily dollar returnthat could be earned on these savings? (Round your answer to 2 decimal places. (e.g.,32.16))

 

 

Dollar return

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c-1

What is the maximum monthly chargeCookie Cutter should pay for this lockbox system if the payment isdue at the end of the month? (Round your answer to 2 decimal places. (e.g.,32.16))

 

Maximum monthly charge

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c-2

What is the maximum monthly chargeCookie Cutter should pay for this lockbox system if the payment isdue at the beginning of the month? (Round your answer to 2 decimal places. (e.g.,32.16))

 

 

Abhinav 04-Dec-2019

Answer (UnSolved)

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