Result of implementing the lockbox system

Assignment Help Financial Management

Reference no: EM131346946

It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. It is expected that the lockbox system will reduce receipt and deposit times to three days total. Average daily collections are $121,000, and the required rate of return is 6 percent per year. Assume 365 days per year.

a. What is the reduction in outstanding cash balances as a result of implementing the lockbox system?

Cash balance reduction $

b. What is the daily dollar return that could be earned on these savings? (Round your answer to 2 decimal places. (e.g., 32.16))

Dollar return $

c-1. What is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the end of the month? (Round your answer to 2 decimal places. (e.g., 32.16))

Maximum monthly charge $

c-2. What is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the beginning of the month? (Round your answer to 2 decimal places. (e.g., 32.16))

Maximum monthly charge $

Reference no: EM131346946

Questions Cloud

Did your understanding of academic writing improve : Evaluate the usefulness of the paper review tool. Did your understanding of academic writing improve? Will you use the Ashford Writing Center to review your work in the future? Why or why not?

Discuss the arguments against auteur theory : Name a director who you would consider an auteur and explain your reasoning.Discuss the arguments against auteur theory and provide examples to support your points.Examine how the auteur theory influences audiences and critics, using examples from ..

Determine the horsepower : Determine the horsepower corresponding to 1.00 MJ/h. If, in an average 24.0 h day, your energy output is 8.40 MJ, determine your average daily horsepower output.

How long before it needed to be recharged again : If the monster consumed its charged energy at a rate of 1.30 MJ/h, how long before it needed to be recharged again?

Result of implementing the lockbox system : It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposit checks from customers. Cookie Cutter’s management is considering a lockbox system to reduce the firm’s collection times. It is expected that the lockbox system will red..

Determine the amount of heat liberated : Determine the amount of heat liberated at the standard reference state as 1 mole of glucose is metabolized according to the reaction.

Describe each of the three basic categories of sound : There are many types of sound in a film. Some are diegetic (sounds that are represented as coming from within the world of the film); others are non-diegetic (sounds that come from outside the world of the film). Your text describes the different ..

Who have had the most influence in your life and why : Who have had the most influence in your life and why? What are your goals you want to obtain? Why is education so important?

Current state of operating systems : You will consider the current state of operating systems and consider potential innovations to improve them - dawn of computers and the information age, there were no operating systems.

User Account

All Pages