Lockbox system
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Linkup Systems, which provides investors with computerized information about stock prices, is considering the establishment of a lockbox system with its bank. The firm receives daily remittances of $1.5 million, and could earn 9% on any funds freed up through faster collections. If the lockbox system can save 2 days in the collection process, and the firm's bankers will charge $200,000 per year to operate the lockbox system, is it worth it to establish the system?
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Benefits= Interest earned on Funds freed up
=1500000 *9%*2
=$270000
Charges=$200000
Net Benfit= Benfit - charges
=270000-200000
=$70000
Hence this is worth to establishing as there is a gain of $70000
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