Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Anne Teak, the
a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)
b. Is it worthwhile to adopt the system?
multiple choice
-
Yes
-
No
c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Transcribed Image Text:4
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 600
payments a day will be made to lock boxes with an average payment size of $2,000. The bank's charge for operating the lock boxes is
$0.30 a check. The interest rate is 0.011% per day.
5
points
eBook
B
Hint
Print
a. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate
calculations.)
Net daily advantage
b. Is it worthwhile to adopt the system?
O Yes
O No
c. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not
round intermediate calculations. Round your answer to 2 decimal places.)
Minimum reduction in time
days
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