Arshadi Wineries Is Considering the Purchase of Lockbox Services from Bob's

question 83

Multiple Choice

Arshadi Wineries is considering the purchase of lockbox services from Bob's Bank. Currently, it takes six days to collect funds from customers; this would be reduced by two days with the lockbox system. The average number of payments received per day is 300 and the average cheque size is $150. Bob's will charge 5'per cheque in return for operating the lockbox system. Assume one-year T-bills yield 5%, and use a 360-day year.

What is the smallest acceptable reduction in collection time that could occur, from the point-of-view of Arshadi Wineries that would make the lockbox acceptable?

• A) 2.00 days
• B) 2.25 days
• C) 2.50 days
• D) 2.75 days
• E) 3.00 days

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Definitions:

Procedure Manual

A document that outlines the steps or actions necessary to carry out particular tasks in a consistent and reliable manner, often used in organizations for training and reference.

Customer Service

The assistance and support provided by a company to those who buy or use its products or services, aiming to ensure satisfaction.

Flowchart

A diagram that displays the sequence of work steps in a process or system.

Numbering Systems

A system of assigning numbers to items in a way that demonstrates their order, position, or identification.