P1513 LOCKBOX SYSTEM Eagle Industries believes that a lockbox system can shorten its accounts receivable collection period by 3 days. Credit sales are $3,240,000 per year, billed on a continuous basis. The firm has other equally risky investments that earn a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.)

a. What amount of cash will be made available for other uses under the lockbox system?

b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system?

P162 COST OF GIVING UP THE EARLY PAYMENT DISCOUNTS Determine the cost of giving up the early payment discount under each of the following terms of sale. (Note: Assume a 365-day year.)

a. 2/10 net 30.

b. 1/10 net 30.

c. 1/10 net 45.

d. 3/10 net 90.

e. 1/10 net 60.

f. 3/10 net 30.

g. 4/10 net 180.