Question: Carter & Carter is considering setting up a regional lockbox system to speed up collections. The company sells to customers all over the U .

Carter & Carter is considering setting up a regional lockbox system to speed up collections. The company sells to customers all over the U.S., and all receipts come in to its headquarters in San Francisco. The firm's average accounts receivable balance is $2.5 million, and they are financed by a bank loan at an 11% annual interest rate. The firm believes this new lockbox system would reduce receivables by 20%. If the annual cost of the system is $15,000, what pre-tax net annual savings would be realized?

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!

Q:

Carter & Carter is considering setting up a regional lockbox system to speed up collections. The company sells to customers all over the U.S., and all receipts come in to its headquarters in San...

Q:

Finance Management Question, Topics include: Nominal Annual Percentage, Cash Conversion Cycle, Cash Receipts, NPV Lease Analysis. The excel file has 5 tabs that need to be completed, please show all...

Q:

12 10 Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $2.5 million, and they are...

Q:

44. Nogueiras Corps budgeted monthly sales are $7,000, and they are constant from month to month. 40% of its customers pay in the first month and take the 2% discount, while the remaining 60% pay in...

Q:

Whitmer Inc. sells to customers all over the U . S . , and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $ 2 . 5 million, and they are...

Q:

Sunny Sports, Inc. is a retailer of outdoor sporting goods. It sells to customers all over the U . S . and Canada and all receipts come in to its headquarters in Las Vegas. The firm's average...

Q:

Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $2.5 million, and they are financed...

Q:

Sunny Sports, Inc. is a retailer of outdoor sporting goods. It sells to customers all over the U.S. and Canada and all receipts come in to its headquarters in Las Vegas. The firm's average accounts...

Q:

Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $2.5 million, and they are financed...

Q:

Whitmer Inc. sells to customers all over the U . S . , and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $ 2 . 5 million, and they are...

Q:

Why are there two stages of allocation in activity-based costing?

Q:

What thermodynamic consideration prevents ion pairs from contributing significantly to protein stability?

Q:

4. Explain the distinction between the horizontal and vertical interpretations of the demand curve. LO1

Q:

The first scenario will be a Verbal Judo scenario in which your scenario follows the standard Verbal Judo interaction: You need to ask somebody to modify their behavior either to do something or to...

Q:

3 The Amish forgive those involved in conflict with them because of their deeply held religious beliefs. Are there other reasons for forgiveness that can be useful in a conflict?

Q:

4 What is your reaction to the information on Amish forgiveness in light of what we learned about Amish shunning earlier in the chapter?

Q:

Think of an attitude you have about conflict that is making it difficult for you to talk productively about disagreements with someone in your life. For example, do you believe that discussing...