Question: Question 2 (15 Points) Tantom Industries is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments

Question 2 (15 Points)

Tantom Industries is investigating a lockbox system to reduce its collection time. It has determined the following:

Average number of payments per day

435

Average value of payment

$920

Variable lockbox fee

$0.15

Annual lockbox fee

$2000

Daily interest rate

0.068%

The total collections time will be reduced by 3 days if the lockbox system is implemented.

a. (5 pts) What is the annual benefit of this lockbox system?

b. (5 pts) What is the annual cost of this lockbox system?

c. (5 pts) Should the Tantom Industries implement this proposed lockbox system? Why or why not?

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:

Imagine that we are observing two different police officers for their shooting accuracy. The first officer practices almost every day year-round. After watching her for a while, we estimate that she...

Q:

Tantom Industries is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day 435 Average value of payment $920 Variable...

Q:

Problem 2 (10 Marks) Roze Corporation is investigating a lockbox system to reduce its collection time. It has determined that on average, there are 405 payments with an average value of $1,200 each....

Q:

Paper Submarine Manufacturing is invostigating determined the following a lockbox system to reduce its oolection time. It has Average number of payments per day Average value of payment Variable...

Q:

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day 4 3 5 Average value of payment $ 8 4...

Q:

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day Average value of payment Variable...

Q:

Looking for PV, NPV, and 2 Net Cash Flows Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments...

Q:

PLEASE WRITE THE ANSWER FOR THE INCORRECT ONES!!!! Each business day, on average, a company writes checks totaling $17,000 to pay its suppliers. The usual clearing time for the checks is four days....

Q:

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day Average value of payment Variable...

Q:

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day Average value of payment Variable...

Q:

value: 4.00 points Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day Average value of...

Q:

A company provided the following data: Standard fixed overhead rate (SFOR) ........ $7 per direct labor hour Actual fixed overhead costs ........... $250,895 Standard hours allowed per unit...

Q:

Consider the following equilibrium process at 686°C: The equilibrium concentrations of the reacting species are [CO] = 0.050 M, [H2] = 0.045 M, [CO2] = 0.086 M, and [H2O] = 0.040 M. (a) Calculate...

Q:

What is a rubber stamp approval in the context of shell company fraud? Group of answer choices A physical stamp used to validate invoices A government - issued certification An automated system for...

Q:

(a) Distinguish between current assets and non-current assets. (b) Distinguish between current liabilities and non-current liabilities. (c) Explain why these distinctions are useful.

Q:

The system of Prob. 5/101 is repeated here. Crank OA is rotating at a counterclockwise angular rate of 9 rad /s, and this rate is decreasing at 5 rad/s 2 . Determine the angular acceleration a AB of...

Q:

Suppose that f sx, y, zd t(sx2 1 y2 1 z 2 ), where t is a function of one variable such that ts2d 25. Evaluate yyS f sx, y, zd dS, where S is the sphere x2 1 y2 1 z2 4.

Q:

What are standard hours produced? What purpose do they serve?

Q:

Prove Theorems 6.16.3 for discrete random variables X and Y. THEOREM 6.1 Let c be a constant. Then the expected value of c is E(c) = c

Q:

The types of businesses that would benefit from the use of Facebook, Twitter and Instagram are described

Q:

What types of nonverbal behavior have scholars identifi ed?

Q:

Attend a gathering of people from a culture different from yours. It might be a meeting at a Jewish temple if youre Christian, an African American church if you are white, or a meeting of Asian...

Q:

To what extent do Celia and Bernadette engage in dual perspective to understand each other?