Solid Financial provides lockbox services. They estimate that your firm can reduce its average collection mail time by 1.6 days and the clearing and processing time by 1.2 days by implementing their system. Your firm receives 74 checks a day with an average value of $9,750 each. The current T-Bill rate is .014 percent per day. Assume a 365-day year. What is the net amount of annual income your firm can earn if it installs this service at an annual cost of $48,000?
A) $65,675.00
B) $62,640.00
C) $56,408.17
D) $55,232.22
E) $58,746.20
D) $55,232.22
Explanation: Float reduction days = 1.6 + 1.2
Float reduction days = 2.8 days
Dollars of float saved = 2.8(74)($9,750)
Dollars of float saved = $2,020,200
Net annual income = .00014(365)($2,020,200) ? $48,000
Net annual income = $55,232.22
You might also like to view...
Two-sided messages are more effective with more educated audiences and those who are initially opposed
Indicate whether the statement is true or false
What is implicit leadership theory and how did it contribute to the concept of global leadership behaviors? What are the limitations of this approach?
What will be an ideal response?
An opportunity assessment plan is basically the same thing as a business plan.
Answer the following statement true (T) or false (F)
What is noise in the communication process? What are the three typical sources of noise? Provide an example of noise you have experienced or observed.
What will be an ideal response?