Question: A company receives an average of 100 000 in cheques per
A company receives an average of $100,000 in cheques per day from its customers. It takes the company an average of five days to receive and deposit these cheques. The company is considering a lockbox arrangement that would reduce its collection float time by three days, and cost it $50 per month. If its opportunity cost of funds tied up in float is 2 percent, should it adopt the new system?
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