Sussex Inc., a large fertilizer distributor based in Nova Scotia, is planning to use a lockbox system

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Sussex Inc., a large fertilizer distributor based in Nova Scotia, is planning to use a lockbox system to speed up collections from its customers located on the West Coast. A Vancouver-area bank will provide this service for an annual fee of $10,000 plus 10 cents per transaction. The estimated reduction in collection and processing time is one day. If the average customer payment in this region is $5,700, how many customers each day, on average, are needed to make the system profitable for Sussex? Treasury bills are currently yielding 5 percent per year and assume 365 days per year.

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Fundamentals of Corporate Finance

ISBN: 978-0071051606

8th Canadian Edition

Authors: Stephen A. Ross, Randolph W. Westerfield

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