Problemfirm a is considering the use of a lock-box system, Ask an Expert

Accounting

Problem:

Firm A is considering the use of a lock-box system. The firm's average check receipt is $150. The company invests excess cash in money market and earns 8% p.a. The lock-box system will speed up collection by 2.5 days.

Required:

Question: What is the maximum per check processing cost payable by the firm?

a. $0.083

b. 0.30

c. 4.8

d. 0.03

e. 8.22

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170612

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