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Should the owner employ the billing firm and why

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Problem 1: The Fast Reader Company supplies bulletin board services to numerous hotel chains nationwide. The owner of the firm is investigating the desirability of employing a billing firm to do her billing and collections. Because the billing firm specialises in these services, collection float will be reduced by 12 days. Average daily collections are $1 200, and the owner can earn 7% annually (expressed as an APR with monthly compounding) on her investments. If the billing firm charges $400 per month, should the owner employ the billing firm?

Reference no: EM132760260

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