Question

Jennifer Electrical is evaluating whether a lockbox it is currently using is worth keeping. Management estimates that the lockbox reduces the mail float by 1.3 days and the processing by half a day. The remittances average $53,000 a day for Jennifer Electrical, with the average check being for $500. The bank charges $0.34 per processed check. Assume that there are 270 business days in a year and that the firm’s opportunity cost for these funds is 9 percent. What will the firm’s savings be from using the lockbox? (Round answer to 0 decimal places, e.g. 5,275.)

The firm’s savings from using the lockbox is $ .

Answer 1

The firm's saving from using the lockbox = $7,710.23