Question
Tantom Industries is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day 435 Average
Tantom Industries is investigating a lockbox system to reduce its collection time. It has determined the following:
| Average number of payments per day | 435 |
| Average value of payment | $920 |
| Variable lockbox fee | $0.15 |
| Annual lockbox fee | $2000 |
| Daily interest rate | 0.068% |
The total collections time will be reduced by 3 days if the lockbox system is implemented.
a. (5 pts) What is the annual benefit of this lockbox system?
b. (5 pts) What is the annual cost of this lockbox system?
c. (5 pts) Should the Tantom Industries implement this proposed lockbox system? Why or why not?
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Quantum Economics And Finance
Authors: David Orrell
3rd Edition
1916081630, 978-1916081635
