Lg4 632 part 5 short term financial decisions a what

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Unformatted text preview: in why or why not. LG6 14–14 Lockbox system Eagle Industries feels that a lockbox system can shorten its accounts receivable collection period by 3 days. Credit sales are $3,240,000 per year, billed on a continuous basis. The firm has other equally risky investments with a return of 15%. The cost of the lockbox system is $9,000 per year. LG4 632 PART 5 Short-Term Financial Decisions a. What amount of cash will be made available for other uses under the lockbox system? b. What net benefit (cost) will the firm realize if it adopts the lockbox system? Should it adopt the proposed lockbox system? LG6 14–15 CHAPTER 14 CASE Zero-balance account Union Company is considering establishment of a zerobalance account. The firm currently maintains an average balance of $420,000 in its disbursement account. As compensation to the bank for maintaining the zerobalance account, the firm will have to pay a monthly fee of $1,000 and maintain a $300,000 non-interest-earning deposit in the bank. The firm currently has no other deposits in the bank. Evaluate the proposed zero-balance account, an...
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This document was uploaded on 01/19/2014.

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