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How much is the net benefit or loss from setting-up a collection office? Assume a 365-day year. (NOTE: Round off your answers to the nearest
How much is the net benefit or loss from setting-up a collection office? Assume a 365-day year. (NOTE: Round off your answers to the nearest whole number: indicate a negative amount if net loss) * HK Company, with operations located in Quezon City, has determined that majority of its customers are located in Makati and Taguig. Therefore, in an effort to speed up its collections, the company is planning to set-up a collection office in Ayala Avenue. If it is to be implemented, the collection time can be reduced by 2.5 days. To help you with your analysis, the following information were provided: P Average payment transactions per day Average value of payment Variable processing fees (per transaction, per day) Fixed annual expenses of the collection office Annual interest rate on money market securities 2,500 1,350 0.65 32,000 7.50%
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