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Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock - box system. She forecasts that 5 5 0 payments a
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lockbox system. She forecasts that payments a day will be made to lock boxes with an average payment size of $ The bank's charge for operating the lock boxes is $ a check. The interest rate is per day.
a If the lock box makes the cash available days earlier, calculate the net daily advantage of the system.
Note: Do not round intermediate calculations.
b Is it worthwhile to adopt the system?
c What minimum reduction in the time to collect and process each check is needed to justify use of the lockbox system? Note: Do not round intermediate calculations. Round your answer to decimal places.
tablea Net daily advantage,b Is it worthwhile to adopt the system?,c Minimum reduction in time,days
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