Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 5 days. Credit sales are $3,200,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.) a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system? a. The amount of cash that will be made available for other uses under the lockbox system is $ (Round to the nearest dollar.)

Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 5 days. Credit sales are $3,200,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.) a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system? a. The amount of cash that will be made available for other uses under the lockbox system is $ (Round to the nearest dollar.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter23: Other Topics In Working Capital Management

Section: Chapter Questions

Problem 2P: Optimal Cash Transfer Barenbaum Industries projects that cash outlays of 4.5 million will occur...

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