EBK CORPORATE FINANCE
EBK CORPORATE FINANCE
4th Edition
ISBN: 9780134202785
Author: DeMarzo
Publisher: VST
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Chapter 26, Problem 7P

The Fast Reader Company supplies bulletin board services to numerous hotel chains nationwide. The owner of the firm is investigating the benefit of employing a billing firm to do her billing and collections. Because the billing firm specializes in these services, collection float will be reduced by 20 days. Average daily collections are $1200, and the owner can earn 8% annually (expressed as an APR with monthly compounding) on her investments. If the billing firm charges $250 per month, should the owner employ the billing firm?

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