Currently, it takes five days from the time customers mail payments until Shark Bait Rafts (SBR) deposits them. SBR would like to set up a lockbox collection system that would reduce this collection float by three days. If SBR receives an average of $2,800 in payments per day and its opportunity cost is 16 percent, how much should SBR be willing to pay each month for the lockbox system?

Currently, it takes five days from the time customers mail payments until Shark Bait Rafts (SBR) deposits them. SBR would like to set up a lockbox collection system that would reduce this collection float by three days. If SBR receives an average of $2,800 in payments per day and its opportunity cost is 16 percent, how much should SBR be willing to pay each month for the lockbox system?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

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