Langley Corporation currently collects all of its customer payments in Greensboro. By going to a new...
Langley Corporation currently collects all of its customer payments in Greensboro. By going to a new lockbox system with boxes in Chicago and Boulder, Langley expects to reduce the time from when customers mail their checks to when the funds are collected. It expects the time to fall from an average of 9 days to an average of 4 days, a 5-day savings. Langley collects $50,000 per day. The extra costs associated with the lockbox are $15,000 per year. Langley's opportunity cost of funds is 10% per year. What is the expected annual before-tax profit of using the new lockbox system?
Group of answer choices
$15,000
$10,000
$25,000
none of these
Homework Answers
Savings of the loackbox system = Days saved * amount saved per day * Cost
= 5*50000*10%
= 25000
Annual Profit = Savings-cost
= 25000-15000 = $10000
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Langley Corporation
currently collects all of its customer payments in Greensboro. By
going to a new...
Langley Corporation currently collects all of its customer payments in Greensboro. By going to a new...
Langley Corporation currently collects all of its customer payments in Greensboro. By going to a new lockbox system with boxes in Chicago and Boulder, Langley expects to reduce the time from when customers mail their checks to when the funds are collected. It expects the time to fall from an average of 9 days to an average of 4 days, a 5-day savings. Langley collects $50,000 per day. The extra costs associated with the lockbox are $15,000 per year. Langley's...
Langley Corporation currently collects all of its customer payments in Greensboro. By going to a new lockbox system with...
Langley Corporation currently collects all of its customer payments in Greensboro. By going to a new lockbox system with boxes in Chicago and Boulder, Langley expects to reduce the time from when customers mail their checks to when the funds are collected. It expects the time to fall from an average of 9 days to an average of 4 days, a 5-day savings. Langley collects $50,000 per day. The extra costs associated with the lockbox are $15,000 per year. Langley's...
Fickle Sickles collects 15,000 checks per 365-day year with average amount $170 and total delay 5...
Fickle Sickles collects 15,000 checks per 365-day year with average amount $170 and total delay 5 days. A lockbox system would reduce that delay to 3 days, and it would also reduce FISI's check processing costs by $.01 per check. The annual fee on the lockbox would be $2,500. What is the annual net benefit associated with using the lockbox? FISI has an 7% cost of capital.
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Based on the case study below, fill out the Excel file and MUST show math appropriate...
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Supplemental Case Material
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The system that Larson has chosen to support their recruiting
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