It Takes Your Firm 2 Days to Prepare and Mail

question 312

Multiple Choice

It takes your firm 2 days to prepare and mail out the monthly statements to your customers. On average, the mail time between your firm and your customers is 4.5 days. It takes your firm an average of 2.5 days to process customer payments once they are received. Customer cheques take an average of 1 day to clear the bank. What is your total collection time?

• A) 4.5 days
• B) 7.0 days
• C) 8.0 days
• D) 10.0 days
• E) 13.5 days

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Definitions:

Compounded Semi-annually

A method of calculating interest in which the interest is added to the principal sum twice a year.

Savings

Money that is set aside or stored for future use or emergencies, rather than spent immediately.

Invested

The act of allocating money or capital to an endeavor with the expectation of obtaining an additional income or profit.

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as an income stream for retirees.