Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days. Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm processing time = 1.0 day Total = 4.0 days The following is also known: Daily interest on Treasury bills = 0.025% Average number of daily payments to lockboxes = 4,000 Average size of payment = $400 A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed. What are Murkywater’s average daily collections? Multiple Choice $1,600,000 $1,200,000 $1,000,000 $1,800,000 $1,400,000
Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days. Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm processing time = 1.0 day Total = 4.0 days The following is also known: Daily interest on Treasury bills = 0.025% Average number of daily payments to lockboxes = 4,000 Average size of payment = $400 A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed. What are Murkywater’s average daily collections? Multiple Choice $1,600,000 $1,200,000 $1,000,000 $1,800,000 $1,400,000
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 33P
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Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days.
- Reduction in mailing time = 1.5 day
- Reduction in clearing time = 1.5 day
- Reduction in firm processing time = 1.0 day
- Total = 4.0 days
The following is also known:
- Daily interest on Treasury bills = 0.025%
- Average number of daily payments to lockboxes = 4,000
- Average size of payment = $400
A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed.
What are Murkywater’s average daily collections?
Multiple Choice
$1,600,000
$1,200,000
$1,000,000
$1,800,000
$1,400,000
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