Although faust corporation has customers dispersed

Reference no: EM13620955

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: EM13620955

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