Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days. Reduction in...
Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days.
- Reduction in mailing time = 1.5 day
- Reduction in clearing time = 1.5 day
- Reduction in firm processing time = 1.0 day
- Total = 4.0 days
The following is also known:
- Daily interest on Treasury bills = 0.025%
- Average number of daily payments to lockboxes = 4,000
- Average size of payment = $400
A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed. What are the costs associated with the proposal?
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Murkywater Company is considering a lockbox system. Its
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