Bumper Crop, Inc., a large fertilizer distributor based in California, is planning to use a lockbox system

Question:

Bumper Crop, Inc., a large fertilizer distributor based in California, is planning to use a lockbox system to speed up collections from its customers located on the East Coast. A Philadelphia-area bank will provide this service for an annual fee of $30,000 plus 10 cents per transaction. The estimated reduction in collection and processing time is one day. If the average customer payment in this region is $6,000, how many customers each day, on average, are needed to make the system profitable for Bumper Crop? Treasury bills are currently yielding 5 percent per year.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals Of Corporate Finance

ISBN: 9780072553079

6th Edition

Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan

Question Posted: