About six days to receive and deposit checks from customers

Assignment Help Financial Management

Reference no: EM131081688

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 $136,000, and the required rate of return is 5 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: EM131081688

Questions Cloud

What is the minimum value of p necessary to meet your goal : What is the minimum value of p necessary to meet your goal.

Comparative advantage with respect to united states : Briefly explain whether you agree with the following argument: "Unfortunately, Bolivia does not have a comparative advantage with respect to the United States in the production of any good or service."

What will be darkhawk bonds price in year : DarkHawk Co. issued $1000 face bonds with a 6% annual coupon in 2010. The bonds mature in 2030. Exactly 5 years later a company financially similar to DarkHawk, is preparing to issue 20 year $1000 face bonds with a 7% annual coupon. What will be Dark..

Explore the story through the three paradigms of identity : Write a reflection paper which synthesizes your new scholarship and gives meaning to the time that you have spent reading and learning about issues related to conflict coaching archetypes. The goal of this paper is to think about the "so what, why..

About six days to receive and deposit checks from customers : 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..

Calculate the country economic growth : Suppose a country's nominal GDP increases from $100 billion in 2012 to $120 billion in 2013. The GDP implicit price deflator was 100 in 2012 and 100.1 in 2013. Calculate the country's economic growth.

Buybacks can be used to maintain certain stock price range : A firm should only pay cash dividends during the maturity phase. A stock dividend is a lower cost alternative to a cash dividend and can be considered at all but the initial stages of a corporate life cycle. A poison pill strategy should be considere..

Impact the theory of consumer choice : You have been asked to assist your organization's marketing department to better understand how consumers make economic decisions. Write a 1,050-word analysis that includes the following:

Cost of trade credit and bank loan : Lamar Lumber buys $8 million of materials (net of discounts) on terms of 3/5, net 30; and it currently pays after 5 days and takes discounts. Lamar plans to expand, which will require additional financing. Assume 365 days in year for your calculation..

User Account

All Pages