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 $2.5 million,and they are financed by a bank loan at an 11% 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 $15,000,what pre-tax net annual savings would be realized?
A)$29,160
B)$32,400
C)$36,000
D)$40,000
E)$44,000

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 $2.5 million,and they are financed by a bank loan at an 11% 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 $15,000,what pre-tax net annual savings would be realized?
A)​$29,160
B)​$32,400
C)​$36,000
D)​$40,000
E)​$44,000

Quizplus · Accepted Answer

The Answer of ​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 $2.5 million,and they are financed by a bank loan at an 11% 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 $15,000,what pre-tax net annual savings would be realized?
A)​$29,160
B)​$32,400
C)​$36,000
D)​$40,000
E)​$44,000

​Whitmer Inc

Whitmer Inc