How much is the lockbox system worth on a monthly basis

Assignment Help Financial Econometrics
Reference no: EM13334625

Although faust corporation has customers dispersed throughout the United States, the company has maintained its headquarters and central billing system in Atlanta. Management is considering an alternative collection procedure to reduce its float. On average, it takes five days from the time customers mail payments until Faust is able to receive, process, and deposit them. Faust would like to set up a lockbox collection system, which it estimates would reduce the time lag from customer mailing to deposit by four days - bringing it down to one day. Faust receives an average of $2,520,000 in payments per day.

If Faust's opportunity cost is 10 percent, how much is the lockbox system worth on a monthly basis

Reference no: EM13334625

Questions Cloud

How much does marcia need to invest each year : Marcia Stubern is planning for her golden years. She will retire in 20 years, at which time she plans to begin withdrawing $60,000 annually. She is expected to live for 20 years following her retirement.
A proposal for new web site development project : The proposal should be approximately 2 pages, indicating the name of the business, the types of products it sells, a proposed structure of the site, and a database connectivity plan (ie... where a database will be utilized within the Web site), an..
Explain how do you write two half balanced equations : how do you write two half balanced equations for the following acidic solution MnO4^-(a)+Fe(s)--->Mn^2+(aq) +Fe^2+(aq)
What is legal leverage : What is legal leverage? How would legal literacy help maximize business opportunity and reduce legal risk at your place of employment?
How much is the lockbox system worth on a monthly basis : Management is considering an alternative collection procedure to reduce its float. On average, it takes five days from the time customers mail payments until Faust is able to receive, process, and deposit them.
Explain why should the change in credit terms be made : Rramsey tires sells on credit terms of net 45 days, whereas the rest of the industry sells on terms of net 30 days. On annual credit sales of $6 million, Ramsey currently averages 52 days sales in accounts receivable.
Describe the components of a risk management plan : What is the difference between scope and a project plan? What basic questions must a scope statement answer?
Estimate the spacing between the slits of the grating : The wavelength of the laser beam used in a compact disc player is 510 nm. Estimate the spacing between the slits of the grating
What would make for a larger increase in the stock variance : what would make for a larger increase in the stock variance an increase of 1.5 in its beta or an increase of 3% in its residual standard deviation.

Reviews

Write a Review

Financial Econometrics Questions & Answers

  Determine what is the break-even quantity per unit

Shapland Inc. has fixed operating costs of $350,000 and variable costs of $60 per unit. If it sells the product for $70 per unit, what is the break-even quantity

  What is the most which would be willing to pay for the stock

Metasteel Limited Co. has a stable sales track record but does not expect to grow in the next several years. Its last annual dividend was $5.75. If the required rate of return on similar investments is 18 percent

  What is alices self-employment tax liability for 2013

Alice is self-employed in 2013. Her net business profit on her Schedule C for the year is $140,000.  What is her self-employment tax liability for 2013

  What is the maturity risk premium for the 2-year security

The real risk-free rate is 3%, and inflation is expected to be 2% for the next 2 years. A 2-year Treasury security yields 7.5%. What is the maturity risk premium for the 2-year security

  Find what are the number of copies sold in three years

Your finance text book sold 47,000 copies in its first year. The publishing company expects the sales to grow at a rate of 19.0 percent for the next three years, and by 6.0 percent in the fourth year.

  Find the values of x and y that maximize the firms revenue

If the company buys x minutes of television advertising and y minutes of radio advertising, its revenue in thousands of dollars is given by: f(x,y) = -2x^2 - y^2 + xy + 8x + 3y

  What is the best estimate of the companys cost of equity

Suppose In a Found Ltd. just issued a dividend of $2.15 per share on its common stock. The company paid dividends of $1.75, $1.89, $1.96, and $2.07 per share in the last four years.

  What will the new stock price be if project is undertaken

Gross revenue last year were $9.9 million, and total costs were $5.0 million. Blaine Company has 1.6 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 6 percent per year.

  What is the companys wacc at all the equity used

The before-tax cost of debt is 7.50%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity used is from retained earnings

  Describe relationship between discounting and compounding

Calculate the amount of money that Emily needs to set aside from her bonus this year to cover the down payment on a new car, assuming she can earn 6% on her savings. What if she could earn 10% on her savings

  Determine what is the cash flow to stockholders during 2014

Weiland Co. shows the following information on its 2014 income statement: sales = $157,000; costs = $81,100; other expenses = $4,400; depreciation expense = $10,100; interest expense = $7,600; taxes = $18,830; dividends = $7,600.

  Journalize the march transactions including explanations

the company uses these accounts: cash, prepaid insurance, land, building, equipment,accounts payable, unearned service revenue, common stock, retained earnings, dividends, service revenue, advertising expense and salaries and wage expense

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd