Question
The Fast Reader Company supplies bulletin board services to numerous hotel chains nationwide. The owner of the firm is investigating the desirability of employing a
The Fast Reader Company supplies bulletin board services to numerous hotel chains nationwide. The owner of the firm is investigating the desirability of employing a billing firm to do her billing and collections. Because the billing firm specializes in these services, collection float will be reduced by 16 days. Average daily collections are $9,600, and the owner can earn 7.2% annually (expressed as an APR with monthly compounding) on her investments. If the billing firm charges $400 per month, should the owner employ the billing firm?
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Part 1
Assuming the billing firm can reduce the collection float immediately, as soon as Fast Reader starts the service they will receive $enter your response here. (Round to the nearest dollar.)
Part 2 The present value of the billing firm's charges is $enter your response here. (Round to the nearest dollar.)
Part 3 Fast Reader SHOULD OR SHOULD NOT employ the billing firm?
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