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What is the daily interest savings of the system

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Problem - Sherman's Sherbet currently takes about 6 clays to collect and deposit checks from customers. A lock-box system could reduce this time to 4 days. Collections average $15,000 daily. The interest rate is .02 percent per day.

a. By how much will the lock-box system reduce collection float?

b. What is the daily interest savings of the system?

c. Suppose the lock-box service is offered for a fixed monthly fee instead of payment per check. What is the maximum monthly fee that Sherman's should be willing to pay for this service? (Assume a 30-day month.)

Reference no: EM132986665

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