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Doel and sisters Inc. receives an average of Tk 650,000 in payments per day. On average it takes 6 days from the time customers mail
Doel and sisters Inc. receives an average of Tk 650,000 in payments per day. On average it takes 6 days from the time customers mail cheques until Doel receives and processes them. Doel is considering the use of a lock box system to reduce collection and processing float. The system will cost Tk. 15,000 per month and will consist of 10 local depository banks and a concentration bank located in Demra. Under this system, cheques should be received at the lockbox locations two days after they are mailed, and daily totals will be transferred 6 days a week to Demra using wire transfers costing Tk 12 each. Doel has an opportunity cost of 10 percent. Should Doel initiate the system? Justify your reasons with your calculations. Doel and sisters Inc. receives an average of Tk 650,000 in payments per day. On average it takes 6 days from the time customers mail cheques until Doel receives and processes them. Doel is considering the use of a lock box system to reduce collection and processing float. The system will cost Tk. 15,000 per month and will consist of 10 local depository banks and a concentration bank located in Demra. Under this system, cheques should be received at the lockbox locations two days after they are mailed, and daily totals will be transferred 6 days a week to Demra using wire transfers costing Tk 12 each. Doel has an opportunity cost of 10 percent. Should Doel initiate the system? Justify your reasons with your calculations
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