Bavarian Brew Float Bavarian Brew Receives About 350 Checks a Day with an Day

Bavarian Brew Float
Bavarian Brew receives about 350 checks a day with an average check size of $550. Currently customer’s payments spend 2 days in the mail. Once a check is received it takes about 1.5 days to process it and another 4 days to clear the banking system. The firm’s opportunity cost is 10%. Assume a 365-day year.

-Bavarian Brew is contemplating implementing a lockbox system.If the system has an annual cost of $60,000,by how many days would the float have to be reduced for the company to implement the system?

A) 2.52 days
B) 3.12 days
C) 3.75 days
D) 4.74 days