Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts
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Question:
Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 450 payments a day will be made to lock boxes with an average payment size of $3,000. The bank's charge for operating the lock boxes is $0.50 a check. The interest rate is 0.012% per day.
a.If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system.(Do not round intermediate calculations.)
b.Is it worthwhile to adopt the system?
- Yes
- No
c.What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system?(Do not round intermediate calculations. Round your answer to 2 decimal places.)
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