Hazel Corp. has just signed up for a lockbox. Management expects the lockbox to reduce the mail

Question:

Hazel Corp. has just signed up for a lockbox. Management expects the lockbox to reduce the mail float by 2.1 days. Hazel Corp.’s remittances average $37,000 a day and the average check is $125. The bank charges $0.37 per processed check. Assume that there are 270 business days in a year. What will the firm’s savings be from using the lockbox if the opportunity cost for these funds is 12 percent?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...