Management expects the lockbox to reduce the mail float

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Reference no: EM131188050

Orange Inc. has just signed up for a lockbox. Management expects the lockbox to reduce the mail float by 1.8 days and processing time by 1 day. The firm's remittances average $155,250 a day, with the average check being $880. The bank charges $0.32 per processed check. Assume that there are 270 business days in a year and its opportunity cost of funds is 6 percent. How much better off is the firm by using the lockbox?

Reference no: EM131188050

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Management expects the lockbox to reduce the mail float : Orange Inc. has just signed up for a lockbox. Management expects the lockbox to reduce the mail float by 1.8 days and processing time by 1 day. The firm's remittances average $155,250 a day, with the average check being $880. The bank charges $0.32 p..

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