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problem: Cross Collectibles currently fills mail orders from all over the United State and receipts come in to headquarters in Little Rock, Arkansas. The company's average accounts receivable (A/R) is $2.5 million and is financed by a bank loan with 11% yearly interest. Cross is considering a regional lockbox system to speed up collections which it believes will reduce A/R by 20%. The yearly cost of the system is $15,000. find out the estimated net annual savings to the company from implementing the lockbox system?

[A] $60,000

[B] $55,000

[C] $40,000

[D] $500,000

[E] $30,000

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M919511

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