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The White Oak Company's annual sales are $219 million. An average of 9 days elapses between when a customer mails its payment and when the funds become usable by the firm.

a. If the company could speed up the collection of funds by 2 days, what would be the increase in the firm's average cash balance?

b. Assuming that these additional funds can be invested in marketable securities that yield 7 percent per year, determine the increase in White Oak's annual (pretax) earnings.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91599933

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