P15-15  Lockbox system Eagle Industries believes that a lockbox system can shorten its accounts receivable collection period by 3 days. Credit sales are $3,240,000 per year, billed on a continuous basis. The firm has other equally risky investments that earn a return of 15%. The cost of the lockbox system is $9,000 per year. (Note: Assume a 365-day year.)  What amount of cash will be made available for other uses under the lockbox system?

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Q: How much is the quarterly deposit?

A: given  FV = 25,000,000 i=2% n= 10*4=40    PMT=FV*i/((1+i)^n-1)

Q: None

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A:

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Q: Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable…

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Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.