Question
Assume the following facts about a firm: Annual cost to maintain a lock box system $1,500 Cost to process each check $0.15 Average amount of
Assume the following facts about a firm:
| Annual cost to maintain a lock box system | $1,500 |
| Cost to process each check | $0.15 |
| Average amount of each check received | $1,500 |
| Number of checks received per year | 4,000 |
| Interest rate on borrowed funds | 8.0% |
Would a lock box system that reduces check clearing time from six to three days be justified? If so how much would it save per year?
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Introduction To Derivatives And Risk Management
Authors: Robert Brooks, Don M Chance, Roberts Brooks
8th Edition
0324601212, 9780324601213
