Whitmer inc sells to customers all over the us and all, Ask an Expert

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Whitmer inc. sells to customers all over the u.s., and all receipts come in to it's headquarteres in New York City. The firm's average accounts receivable balance is $2.5 million, and they are financed by a bank loan at an 6.5% annual interest rate. the Firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce by 20%. If the annual cost is $15,000, what pre-tax net annual savings would be realized?

A. $21,875

B. $20,650

C. $17,500

D. $18,375

E. $21,175

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M91359524

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