Question: Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in

Proposal #2 would establish local collection centers throughout the region to decrease 

Proposal #2 would establish local collection centers throughout the region to decrease the time it takes to convert credit payments that are mailed in by check to cash. It is estimated that establishing these collection centers would reduce the average collection time by 2 days. If the company currently averages $60,000 in collections per day, how many dollars will this suggested cash management system free up? If all freed up dollars would be used to pay down debt that has an interest rate of 6%, how much money could be saved each year in interest expense? Do the numbers suggest that this new system should be implemented if its total annual cost is $5200? Explain.

Step by Step Solution

3.49 Rating (149 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Answer a It is said that the collection centres would help reduce the collection time ... View full answer

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

Document Format (2 attachments)

PDF file Icon

635dadf79d9b0_177942.pdf

180 KBs PDF File

Word file Icon

635dadf79d9b0_177942.docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!