It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposi

Question

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 $126,000, and the required rate of return is 4 percent per year. Assume 365 days per year. What is the reduction in outstanding cash balances as a result of implementing the lockbox system?

Explanation / Answer

It takes Cookie Cutter Modular Homes, Inc., about six days to receive and deposi

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.