Result of implementing the lockbox system

Assignment Help Financial Management

Reference no: EM131058623

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 $130,000, and the required rate of return is 5 percent per year. Assume 365 days per year.

What is the reduction in outstanding cash balances as a result of implementing the lockbox system?

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))

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))

Reference no: EM131058623

Questions Cloud

Discussing each of the option pricing models : Please write a paragraph discussing each of the option pricing models and discussing the benefits and limitations of each model. Conclude with an explanation of which model represents the preferred model and/or whether each model should be used for s..

Calculate the company cost of retained earnings : Blue Bayou Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.5% a year, and the common stock currently sells for $52.50 a share. Calculate the company's cost of retained earnin..

Learn about the host country culture : International managers at multinational corporations must learn about the host country's culture. For example, proper attire, timeliness and how to address their foreign colleagues

What is the length of the pulse now : The tension is increased to 13253 N. What is the length of the pulse now?

Result of implementing the lockbox system : 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. What is the reduction in outstanding cash balan..

Alternative offering prices on existing price per share : The Newton Company has 120,000 shares of stock that each sell for $65. Suppose the company issues 9,000 shares of new stock at the following prices: $65, $50, and $45. What is the effect of each of the alternative offering prices on the existing pric..

What are the differences between persuasion and coercion : What are the differences between persuasion and coercion? Is it appropriate for a manager to use coercion? What about emotional persuasion? When?

Is the oil land partnership property-why : James and Suzanne engaged in the grocery business as partners. In one year they earned considerable money, and at the end of the year they invested a part of the profits in oil land, taking title to the land in their names as tenants in common. The i..

Discuss the political values central to liberal democracy : Discuss the political values central to "liberal democracy." In your judgment, which elements stand out as most important? Why? Has the constitutional principle of limited government been lost? Why or why not?

User Account

All Pages