Problem regarding the lock-box arrangement

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Reference no: EM13971162

Community Hospital has annual net patient revenues of $150 million. At the present time, payments received by the hospital are not deposited for six days on average. The hospital is exploring a lock-box arrangement will promises to cut the six days to one day. If these funds released by the lock-box arrangement can be invested at 8%, what will the annual savings be? Assume the bank fee will be $2,000 per month.

Reference no: EM13971162

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