What is the benefit for a firm with daily sales of $30,000 to be able to speed up collections by three days, assuming an 8 percent annual opportunity cost of funds?

Question

Quizplus · Accepted Answer

The daily benefit of speeding up collections by three days would be 8% of the average daily sales of $30,000, which is $2,400. Therefore, the annual benefit would be $2,400 x 365 days = $876,000. However, since the question is asking for the benefit of speeding up collections by three days, the actual benefit would be $2,400 x 3 days = $7,200. Therefore, the best answer is B, which represents the annual benefit of speeding up collections by three days, taking into account the opportunity cost of funds.

What Is the Benefit for a Firm with Daily Sales