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How many customers are needed to make system profitable

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Question - Calculating Transactions Required - Cow Chips, Incorporated, a large fertilizer distributor based in California, is planning to use a lockbox system to speed up collections from its customers located on the East Coast. A Philadelphia-area bank will provide this service for an annual fee of $6,500 plus 10 cents per transaction. The estimated reduction in collection and processing time is one day. Treasury bills are currently yielding 4 percent per year, and there are 365 days per year.

If the average customer payment in this region is $2,900, how many customers each day, on average, are needed to make the system profitable for Cow Chips?

Reference no: EM133189104

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