Charlie Co

question 121

Multiple Choice

Charlie Co. receives an average of 175 cheques a day. The average amount per cheque is $2,100. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 2 days. The bank charges $.25 a cheque for this service. The daily interest rate on Treasury bills is.01 %. What is the net present value of this lockbox arrangement?

• A) $183,750
• B) $185,588
• C) $297,500
• D) $312,500
• E) $327,878

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Definitions:

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A structured treatment environment where patients and therapists live together to work towards healing and rehabilitation.