What pre-tax net annual savings would be realized

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Reference no: EM13789429

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

Reference no: EM13789429

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