Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system.
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Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system.
20-4)
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 $.40 a check. The interest rate is .013% per day.
a-1.If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)
Daily interest saved$
a-2.Is it worthwhile to adopt the system? YesNo
b.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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