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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
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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