How much money can be saved annually by setting up a lock-box system that will process 500 checks per day at a cost of $0.15 per check if each check averages $220,collection float is reduced by 3 days,and the annual interest rate is 8%? (Use a 365-day year.)
A) −$2,125
B) −$975
C) $2,650
D) $26,325

Question

Quizplus · Accepted Answer

Annual savings = (500 × $220 × 3 × 0.08) − (500 × $0.15 × 365) = −$975

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