Purchase Solution

# Calculating expected profit of using new system

Not what you're looking for?

The Apollo Products Company currently collects all of its customer payments in Detroit. By going to a new lock box system with boxes in Los Angeles, Boston, and Atlanta, Apollo Products can reduce the total time it takes to convert customer payments into available funds by an average of 4.50 days. The firm collects an average of \$95,000 per day. The extra costs associated with the lock box system are \$28,500 per year. The opportunity cost of funds is 4.5% per year. What is the expected annual profit of using the new system?

##### Solution Summary

Solution calculates the expected annual profit of using the new lock box system in the given case.

##### Solution Preview

Daily collections = \$95000
Reduction in collection float=4.5 days
Float reduction = daily ...

Solution provided by:
###### Education
• BEng (Hons) , Birla Institute of Technology and Science, India
• MSc (Hons) , Birla Institute of Technology and Science, India
###### Recent Feedback
• "Thank you"
• "Really great step by step solution"
• "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
• "Thanks Again! This is totally a great service!"
• "Thank you so much for your help!"

##### Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

##### Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

##### Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

##### Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

##### Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.