Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined thatthrough the establishment of local collection centers around the country, she can speed up the collection of payments by one andone-half days. Furthermore, the cash management department of her bank has indicated to her that she can defer her payments onher accounts by one-half day without affecting suppliers. The bank has a remote disbursement center in Florida.a. If Neon Light Company has $2.30 million per day in collections and $1.06 million per day in disbursements, how many dollars will thecash management system free up? (Enter your answer in dollars not in millions (e.g., $1,234,567).)Freed-up fundsb. If Neon Light Company can earn 9 percent per annum on freed-up funds, how much will the income be? (Enter your answer indollars not in millions (e.g., $1,234,567).)Interest on freed-up cashc. If the total cost of the new system is $405,000, should it be implemented?O NoO Yes

Freed up funds refers to the release or availability of previously committed funds that can now be…

Answered: Neon Light Company of Kansas City ships…

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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