I need help finding the answers to the questions attached, the class is Fundamentals of Corporate finance
I need your help finding the answers to the following problems: LOCK BOXES: Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. she forecasts that 400 payments a day will be made to lock boxes with an average payment size of $2,000. The bank's charge for operating the lock boxes is $.40 a check. the interest rate is .015 percent per day. How do I explain the following: a. If the lock box saves 2 days in collection float, is it worthwhile to adopt the system? b. What minimum reduction in the time to collect and process each check is needed to justify use of the lock box system? Thank you!!
© BrainMass Inc. brainmass.com March 4, 2021, 6:08 pm ad1c9bdddfhttps://brainmass.com/business/finance/31384
Solution Preview
a. If the lock box saves 2 days in collection float, is it worthwhile to adopt the system? Yes it is worth it because the .40 per check (.40 x 800) (2 days)) comes out to $160.00 and ...