Assume that Federated Stores, whose credit card billings total $120 billion per year, were to
implement a lockbox arrangement that would speed up the collection of its credit card billings by 2
full days.
If Federated could earn 3.5% on its marketable securities, how much would the firm earn
per year from such a lockbox arrangement? Assume a 365-day year.
A) $316.99 million B) $183.50 million C) $230.14 million D) $244.58 million
C
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