5. MTR bank has agreed to provide a lockbox system to Sexy Inc. for a fixed fee of P50, 000 per year and a rate of P.50 for each payment processed by the bank. On average, Sexy Inc. receives 50 payments per day, each averaging P20,000. With the lockbox system, the company's collection float will decrease by two days. The annual interest rate on money market securities is 6%. If Sexy Inc. makes use of the lockbox system, what would be the net benefit to the company? Use 365 days in a year. A. P50,000 B. P59.125 C. P60,875 D. P120,000

5. MTR bank has agreed to provide a lockbox system to Sexy Inc. for a fixed fee of P50, 000 per year and a rate of P.50 for each payment processed by the bank. On average, Sexy Inc. receives 50 payments per day, each averaging P20,000. With the lockbox system, the company's collection float will decrease by two days. The annual interest rate on money market securities is 6%. If Sexy Inc. makes use of the lockbox system, what would be the net benefit to the company? Use 365 days in a year. A. P50,000 B. P59.125 C. P60,875 D. P120,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: A bank is considering using a “three against six” $2,000,000 FRA to cover its potential loss. The…

A: Bank is considering using a “three against six” = $2,000,000 FRAthe maturity mismatch from having…

Q: A corporation arranges for a $10 million line of credit. The corporation needs to have regular…

A: Note: The options provided are incorrect, I have provided the solution with answer. Please recheck…

Q: Carey Company is borrowing $250,000 for one year at 10.0 percent from Second Intrastate Bank. The…

A: As per the given information:

Q: Bank A pays 5% interest compounded annually on deposits, while Bank B pays 4.25% compounded daily.…

A: Given, Bank A pays 5% compounded annually Bank B pays 4.25% compounded daily.

Q: 6. Your firm, ABC Berhad, has a payable account amount of SGD1,000,000 in 3 months. Your company is…

A: a) For a forward hedge, the firm would enter into a forward contract to sell SGD1,000,000 at the…

Q: A local bank advertises the following deal: "Pay us $100 at the end of each year for 11 years and…

A: In perpetuity is type of annuity in which there are payments forever and for indefinite period of…

Q: A local bank is advertising that it pays depositors 6% compounded monthly, yielding an effective…

A: Simple interest is calculated by multiplying principal into rate of interest for the given period of…

Q: If you purchase $27,000 in U.S. Treasury Bills with a discount rate of 4.2% for a period of 26…

A: Data given: P=Principal amount=$27000 r=Discount rate=4.2%=0.042 t=Time=26 weeks=26/52=0.5 Formula:…

Q: You borrow $1,000 from a bank at 6% annual interest and promise to pay it back after a year. As you…

A: the real interest rate equals the nominal interest rate minus the expected inflation rate.…

Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

100%

5. MTR bank has agreed to provide a lockbox system to Sexy Inc. for a fixed fee of P50, 000 per year and a rate of
P.50 for each payment processed by the bank. On average, Sexy Inc. receives 50 payments per day, each
averaging P20,000. With the lockbox system, the company's collection float will decrease by two days. The
annual interest rate on money market securities is 6%. If Sexy Inc. makes use of the lockbox system, what
would be the net benefit to the company? Use 365 days in a year.
А. Р50,000
В. Р59,125
С. Р60,875
D. P120,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Assume the time from acceptance to maturity on a $2,280,000 banker’s acceptance is 90 days. Further assume that the importing bank’s acceptance commission is 1.25 percent and that the market rate for 90-day B/As is 7 percent. Determine the amount the exporter will receive if he holds the B/A until maturity and also the amount the exporter will receive if he discounts the B/A with the importer’s bank.
BNP Paribas has 800 depositors. Each depositor deposits $1,000 into the bank at t=0. BNP Paribas offers its depositors an 8% interest rate. BNP then uses the deposits to make 2 year simple loans at an interest rate of 8%. Depositors of BNP Paribas can either withdraw their deposits at t=1 or t=2. At t=1, BNP can sell its loans at the initial loan values, if needed. Assume that each depositor believes that there are a total of 300 depositors who will withdraw at t=1. How much of loan payments (in $) does each depositor expects the bank to receive at t=2? Round your answer to at least 2 decimal places.
ABC Corporation receives checks from its customers. The total check value averages 700,000 each day. It takes an average of 5 days from deposits for these to clear the bank. If the bank offers to accelerate the 5-day clearing process to 3 days for a monthly fee of 600. If ABC can earn 4% investment income from excess cash, how much is the net annual benefits/cost of this bank offer?
Bank K is about to sign a loan agreement with a mining company.The current LIBOR rate is 8%.The risk premium for the company has been estimated as 3% and the origination fee will be 0.1875 percent.The bank will be requesting a 9% compensating balance requirement.If the reserve requirement is 6%,what is the promised gross return on the loan?
n this economy, there are 10,000 borrowers. Each person borrows $100 for a 1 year loan. For the lender not to make a loss, the lender must set an interest rate such that they earn at least as much as their outside option of not lending to people from all borrowers that did not default in this economy. In this case, the outside option is the risk-free interest rate on a 1-year US Treasury securtiy. The 1-year USTS pays annual interest rate of i = 0.03. What is the minimum interest rate that the lender will charge to borrow money in this economy