What are the expected annual savings from a lock-box system that collects 150 cheques per day averaging $500 each, and reduces mailing and processing times by 2.5 and 1.5 days respectively, if the annual interest rate is 7 percent?
A) $5,250
B) $13,125
C) $21,000
D) $300,000 Annual savings = average collections x time saved x annual interest rate
= 150 x $500 x (2.5 + 1.5) x .07
Correct Answer:
Verified
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