Question: 05. a) Alpha Itd, a large fertilizer distributor based in Dehradun is planning to use a lockbox system to speed up collections from its customers

05. a) Alpha Itd, a large fertilizer distributor based in Dehradun

05. a) Alpha Itd, a large fertilizer distributor based in Dehradun is planning to use a lockbox system to speed up collections from its customers based in nearby towns. A prominent bank based in Dehradun has proposed to provide this service for an annual fee of Rs.15000 plus 10 paisa per transaction. The estimated reduction in collection is one day. If the average customer payment in this region is Rs.4800, how many customers are needed on an average, each day to make this system profitable for Alpha Ltd. Treasury bills are currently yielding 5 percent per year. Assume 360 days in a year. (4 Marks)

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