Question: Suppose that Mail Box Inc receives 2 000 000 per day from
Suppose that Mail Box, Inc. receives $2,000,000 per day from its customers in the form of checks. It now requires 5 days on average to process the checks. A lock box system will reduce the process time by 2 days (2 days saved) and will cost $330,000. If the firm’s cost of capital is 8%, should they implement the lock box system?
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