Question: 20. A company is considering implementing a lockbox system. There is an annual fee of $6,050 plus a transaction fee of $0.05 per payment. The

20. A company is considering implementing a lockbox system. There is an annual fee of $6,050 plus a transaction fee of $0.05 per payment. The average size of customer payments is $2,955, and there are 27 payments made daily on average. The company can earn an EAR of 2.73% on its cash balances. For the lockbox system to be adopted with a positive NPV, by how many days should the average collection time be reduced at a minimum? Fractional answers are OK. (Assume 365 days in a year.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

A company estimates that it can sell $47,050 worth of goods in the month of April. The account receivable balance at beginning of the month is $1,566. Average collection period is 19 days. Assuming a...

A company is considering implementing a lockbox system. There is an annual fee of $5,400 plus a transaction fee of $0.05 per payment. The average size of customer payments is $2,680, and there are 22...

A company is considering implementing a lockbox system. There is an annual fee of $6,050 plus a transaction fee of $0.05 per payment. The average size of customer payments is $2,955, and there are 27...

A company is considering implementing a lockbox system. There is an annual fee of $5,270 plus a transaction fee of $0.05 per payment. The average size of customer payments is $2,625, and there are 21...

Question 23 (1 point) A company is considering implementing a lockbox system. There is an annual fee of $7,220 plus a transaction fee of $0.05 per payment. The average size of customer payments is...

A company is considering implementing a lockbox system. There is an annual fee of $6,830 plus a transaction fee of $0.05 per payment. The average size of customer payments is $3,285, and there are 33...

Question 1 (1 point) A company is considering implementing a lockbox system. There is an annual fee of $6,700 plus a transaction fee of $0.05 per payment. The average size of customer payments is...

A company is considering implementing a lockbox system. There is an annual fee of $5,660 plus a transaction fee of $0.05 per payment. The average size of customer payments is $2,790, and there are 24...

A company is considering implementing a lockbox system. There is an annual fee of $5,530 plus a transaction fee of $0.05 per payment. The average size of customer payments is $2,735, and there are 23...

thank you A company is considering implementing a lockbox system. There is an annual fee of $6,570 plus a transaction fee of $0.05 per payment. The average size of customer payments is $3,175, and...

Assume that the units shown in the grid are in feet. (a) Determine the exact length and width of the rectangle shown. (b) Determine the perimeter and area. Write your answer in simplest form. -6 4 -3...

A circular tube of inner radius r1 and outer radius r2 is subjected to a torque produced by forces P = 900 lb (see figure). The forces have their lines of action at a distance b = 5.5 in. from the...

A company has 1 , 0 0 0 , 0 0 2 . 5 % fixed rate debt with interest due on December 3 1 of each year on January 1 . It swaps it to fix interest payment for variable payments at the treasury bill rate...

A Nation of Immigrants: American Heritage Magazme - 1 9 9 4 After reading the article answer the following questions. Describe the "whirlwind" that was the American city by 1 9 2 0 .

=+6. How many credit cards do you carry? Do you think that reform of the credit-fueled economic model in the U.S. is essential for a more equitable global economy? In general, to what extent is it...

=+Countrywide? In general, how do you incentivize salespeople who work on commission (as the majority of mortgage brokers did in the

=+5. What reforms would you recommend to a mortgage lender in terms of its employee incentives to ensure it avoids the mistakes of