What pre-tax net annual savings would be realized

Reference no: EM133269370

Question - Whitmer Inc. sells to customers all over the U.S., and all receipts come in to its headquarters in New York City. The firm's average accounts receivable balance is $3.5 million, and they are financed by a bank loan at a 6.75% annual interest rate. The firm is considering setting up a regional lockbox system to speed up collections, and it believes this would reduce receivables by 20%. If the annual cost of the system is $18,000, what pre-tax net annual savings would be realized?

Reference no: EM133269370

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