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A firm is considering paying its suppliers using electronic payments versus paper checks. Given an iof 10%, calculate the cost per payment of using paper
A firm is considering paying its suppliers using electronic payments versus paper checks. Given an iof 10%, calculate the cost per payment of using paper checks. Assuming the cost per payment for the electronic option is $7,417.68, should the firm adopt electronic payments? Why? PV = 365 ASSUMPTIONS PRESENT (PAPER PROPOSED (ELECTRONIC) CHECKS) Average Payment $7,500 $7,500 Credit Terms 40 days 40 Days Float 2.75 Days 1.50 Days Processing Costs Per Item $6.23 $2.00 Yes; even though the firm loses float time with electronic payments, the lower per item cost offsets the Olost float time. incremental per item cost. No; even though paper checks are more expensive, holding onto the funds longer offsets the The firm is indifferent because the average payment is $7,500 regardless of payment method Not an answer choice. A firm is considering paying its suppliers using electronic payments versus paper checks. Given an iof 10%, calculate the cost per payment of using paper checks. Assuming the cost per payment for the electronic option is $7,417.68, should the firm adopt electronic payments? Why? PV = 365 ASSUMPTIONS PRESENT (PAPER PROPOSED (ELECTRONIC) CHECKS) Average Payment $7,500 $7,500 Credit Terms 40 days 40 Days Float 2.75 Days 1.50 Days Processing Costs Per Item $6.23 $2.00 Yes; even though the firm loses float time with electronic payments, the lower per item cost offsets the Olost float time. incremental per item cost. No; even though paper checks are more expensive, holding onto the funds longer offsets the The firm is indifferent because the average payment is $7,500 regardless of payment method Not an answer choice
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