Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days.Reduction in mailing time = 1.5 dayReduction in clearing time = 1.5 dayReduction in firm processing time = 1.0 dayTotal = 4.0 daysThe following is also known:Daily interest on Treasury bills = 0.025%Average number of daily payments to lockboxes = 4,000Average size of payment = $400 A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed. What are the costs associated with the proposal?

Cost of the proposal by multiplying the daily payment by the average size and days.

Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days. Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm processing time = 1.0 day Total = 4.0 days

Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days. Reduction in mailing time = 1.5 day Reduction in clearing time = 1.5 day Reduction in firm processing time = 1.0 day Total = 4.0 days

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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