Solve this problem and give correct answer Cross Collectibles currently fills mail orders from allover the U.S. and receipts come in to headquartersin Little Rock, Arkansas. The firm's averageaccounts receivable (A/R) is $2.5 million and isfinanced by a bank loan with 11 percent annualinterest. Cross is considering a regional lockboxsystem to speed up collections which it believes willreduce A/R by 20 percent. The annual cost of thesystem is $15,000. What is the estimated netannual savings to the firm from implementing thelockbox system?a. $500,000b. $30,000c. $60,000d. $55,000e. $40,000

To calculate the estimated net annual savings for Cross Collectibles from implementing the lockbox…

Answered: Cross Collectibles currently fills mail…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

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ISBN:9781337514835

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Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 5P

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Cross Collectibles currently fills mail orders from all over the U.S. and receipts come in to headquarters in Little Rock, Arkansas. The firm's average accounts receivable (A/R) is $2.5 million and is financed by a bank loan with 11 percent annual interest. Cross is considering a regional lockbox system to speed up collections which it believes will reduce A/R by 20 percent. The annual cost of the system is $15,000. What is the estimated net annual savings to the firm from implementing the lockbox system? a. $500,000 b. $30,000 c. $60,000 d. $55,000 e. $40,000
Cross Collectibles currently fills mail orders from all over the U.S. and receipts come in to headquarters in Little Rock, Arkansas. The firm's average accounts receivable (A/R) is $3.7 million and is financed by a bank loan with 12.5 percent annual interest. Cross is considering a regional lockbox system to speed up collections which it believes will reduce A/R by 23 percent. The annual cost of the system is $15,000. What is the estimated net annual savings to the firm from implementing the lockbox system?
Cross Collectibles currently fills mail orders from all over the U.S. and receipts come in to headquarters in Little Rock, Arkansas. The firm's average accounts receivable (A/R) is $3.7 million and is financed by a bank loan with 12.5 percent annual interest. Cross is considering a regional lockbox system to speed up collections which it believes will reduce A/R by 23 percent. The annual cost of the system is $15,000. What is the estimated net annual savings to the firm from implementing the lockbox system? Give me Answer
Cross Collectibles currently fills mail orders from all over the U.S. and receipts come in to headquarters in Little Rock, Arkansas. The firm's average accounts receivable (A/R) is $3.7 million and is financed by a bank loan with 12.5 percent annual interest. Cross is considering a regional lockbox system to speed up collections which it believes will reduce A/R by 23 percent. The annual cost of the system is $15,000. What is the estimated net annual savings to the firm from implementing the lockbox system? I want Solution
Cross Collectibles currently fills mail orders from all over the U.S. and receipts come in to headquarters in Little Rock, Arkansas. The firm's average accounts receivable (A/R) is $3.7 million and is financed by a bank loan with 12.5 percent annual interest. Cross is considering a regional lockbox system to speed up collections which it believes will reduce A/R by 23 percent. The annual cost of the system is $15,000. What is the estimated net annual savings to the firm from implementing the lockbox system? Give answer to this accounting problem
Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $5.0 million, and they are financed by a bank loan at a 9.50% annual interest rate. The firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce receivables by 20%. If the annual cost of the system is $17,000, what pre-tax net annual savings would be realized? a. $78,000 b. $74,600 c. $95,000 d. $112,000 e. $81,400
The lockbox system
Smith Inc. currently fills mail orders from all over the country and receipts were received in its head office. The company's average accounts receivable is P3,125,000 and is financed by a bank loan with 10% interest. Smith is considering a regional lockbox system to speed up collections. This system is projected to reduce the average accounts receivable by 15%. The annual cost of the lockbox system is P25,000. What is the estimated net annual savings in implementing the lockbox system? A. 22,985 B. 28,455 C. 25,750 D. 21,875
General Account
Knob, Inc., is a nationwide distributor of furniture hardware. The company now uses a central billing system for credit sales of $198.00 million annually. First National, Knob’s principal bank, offers to establish a new concentration banking system for a flat fee of $150,000 per year. The bank estimates that mailing and collection time can be reduced by four days. Assume a 360-day year. By how much will Knob’s cash balances be increased under the new system? (Enter your answer in dollars not in millions.) Assume that the borrowing rate is 12%. How much extra interest income will the new system generate if the extra funds are used to reduce borrowing under Knob’s line of credit with First National? (Enter your answer in dollars not in millions.) Calculate the total annual cost of the old system if collection costs under the old system are $45,000 per year? (Enter your answer in dollars not in millions.)
Answer this general Accounting Question
4 Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $2.5 million, and they are financed by a bank loan at an 11% annual interest rate. The firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce receivables by 20%. If the annual cost of the system is $15,000, what pre-tax net annual savings would be realized? (Hint: Lockbox will reduce annual average balanc of account receivable which in turn save annual interest costs. Compare this savings with the annual lockbox cost)

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