Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Linkup Systems, which provides investors with computerized information about stock prices, is considering the establishment of a lockbox system with its bank. It has just

Linkup Systems, which provides investors with computerized information about stock prices, is considering the establishment of a lockbox system with its bank. It has just implemented a new system which allows it to extend disbursement by 0.5 days. Its daily payments are $1 million. The firm receives daily collections of $2.5 million, and could earn 7.5% on any funds freed up through faster collections. If the lockbox system can save 2 days in the collection process, and the firm's bankers will charge $250,000 per year to operate the lockbox system and facilitate the extended disbursements, is it worth it to the company?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Investments

Authors: Charles J. Corrado

3rd Edition

0072829192, 978-0072829198

More Books

Students also viewed these Finance questions