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LOCKBOX SYSTEM Fisher-Gardner Corporation (FGC) began operations 5 years ago as a small firm serving customers in the Chicago area. However, its reputation and market
LOCKBOX SYSTEM Fisher-Gardner Corporation (FGC) began operations 5 years ago as a small firm serving customers in the Chicago area. However, its reputation and market area grew quickly. Today FGC has customers all over the United States. Desplte its broad customer base, FGC has maintained Its headquarters In Detrolt, and it keeps its central billing system there. On average, It takes 7 days from the time customers mall In payments until FGC can recelve, process, and deposit them. FGC would like to set up a lockbox collection system, which it estimates would reduce the time lag from customer maling to deposit by 2 days-bringing it down to 5 days. FGC recelves an average of S2,300,000 in payments per day a. How much free cash would FGC generate if it implemented the lockbox system? Round your answer to the nearest dollar. Would this be a one-time cash flow or a recurring one, assuming the company ceases to grow? One-time cash flow Y How would growth affect your answer? If the firm grows, cash flow would increase by the differential growth b. If FGC has an opportunity cost of 6%, how much is the lockbox system worth on an annual basis? Round your answer to the nearest dollar c. What is the maximum monthly charge FGC should pay for the lockbox system? Round your answer to the nearest cent
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