The firm's average accounts receivable balance is P2.5 million, and they are financed by a bank loan at an 11% annual interest rate. The firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce receivables by 20%. If the annual cost of the system is P15,000, what pre-tax net annual savings
The firm's average accounts receivable balance is P2.5 million, and they are financed by a bank loan at an 11% annual interest rate. The firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce receivables by 20%. If the annual cost of the system is P15,000, what pre-tax net annual savings
Chapter16: Working Capital Policy And Short-term Financing
Section: Chapter Questions
Problem 24P
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![The firm's average accounts
receivable balance is P2.5 million, and
they are financed by a bank loan at
an 11% annual interest rate. The firm
is considering setting up a regional
lockbox system to speed up
collections, and it believes this would
reduce receivables by 20%. If the
annual cost of the system is P15,000,
what pre-tax net annual savings
would be realized?
P40,000
O P29,160
O P32,400
O P36,000
O P44,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b2d3900-3371-42e8-86f9-13f5bec518e3%2F08c3ba4e-9367-4fe2-97cb-f8b62f4521a9%2F2c6e0hh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The firm's average accounts
receivable balance is P2.5 million, and
they are financed by a bank loan at
an 11% annual interest rate. The firm
is considering setting up a regional
lockbox system to speed up
collections, and it believes this would
reduce receivables by 20%. If the
annual cost of the system is P15,000,
what pre-tax net annual savings
would be realized?
P40,000
O P29,160
O P32,400
O P36,000
O P44,000
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