A firm has a daily average collection of checks equal to R250,000.It takes the firm approximately 4 days to convert the funds into usable cash.Assume (1) a lockbox system could be employed which would reduce the cash conversion procedure to 21/2 days, and (2) the firm could invest any additional cash received at 6 percent after taxes.The lockbox system would be a good buy if it costs only R23,000 annually.
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