Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 2 days Credit sales are $3,400,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 12% The cost of the lockbox system is $11,000 per year (Note Assume a 365-day year) a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system? a. The amount of cash that will be made available for other uses under the lockbox system is $ (Round to the nearest dollar)
Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 2 days Credit sales are $3,400,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 12% The cost of the lockbox system is $11,000 per year (Note Assume a 365-day year) a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system? a. The amount of cash that will be made available for other uses under the lockbox system is $ (Round to the nearest dollar)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 2 days Credit sales are $3,400,000 per year, billed on a continuous basis. The firm has
other equally risky investments with a return of 12%. The cost of the lockbox system is $11,000 per year (Note Assume a 365-day year)
a. What amount of cash will be made available for other uses under the lockbox system?
b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system?
a. The amount of cash that will be made available for other uses under the lockbox system is $ (Round to the nearest dollar)
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