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Asif Co. has annual sales of Rs.9m (all credit). On Average, it takes five days for a check to be deposited. Asif believes that he
Asif Co. has annual sales of Rs.9m (all credit). On Average, it takes five days for a check to be deposited. Asif believes that he can reduce thus float time by two days through the use of lock box. The bank will charge a flat fee of Rs.4,000 PA to perform this service. Assume 360 days in a year. Required: Suppose that the opportunity cost is 10%. Should Asif enter into the lock box agreement? How much will be the days saved to be organization on no profit & no loss (breakeven) Situation
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