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

To calculate the benefit of speeding up collections by three days, we need to multiply the daily sales ($30,000) by the number of days we are speeding up collections (3) and by the opportunity cost of funds (8% or 0.08).

Benefit = $30,000 x 3 x 0.08 = $7,200

Therefore, the annual benefit of speeding up collections would be $7,200.

What Is the Benefit for a Firm with Daily Sales