Calculate total amount of cost

Reference no: EM1362304

Drugs r us operates a mail order business. Firm recieves average $325,000 payments per day. Average 4 days to recieve payment from time customer mails check tell firm recieves payment. a lockbox system that consists of 10 depository banks and a concentration bank would cost $6500 per month. Under this system customers checks would be recieved at lockbox locations witinn one day after mailed, daily total would then be wired to the concentration bank at a cost of $9.75 each. Assume firm can earn 10 percent on marketable securities and that there are 260 working days and hence 260 transfers from each of the lockbox location per year.

A. What is the total amount of cost to operate system?
B. What is the dollar benefit of the system to drugs R us?
C. Should the firm initiate the lockbox system?

Reference no: EM1362304

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