​Whitmer Inc

question 12

Multiple Choice

​Whitmer Inc.sells to customers all over the U.S.,and all receipts come in to its headquarters in New York City.The firm's average accounts receivable balance is $2.5 million,and they are financed by a bank loan at an 11% annual interest rate.The firm is considering setting up a regional lockbox system to speed up collections,and it believes this would reduce receivables by 20%.If the annual cost of the system is $15,000,what pre-tax net annual savings would be realized?

• A)​$29,160
• B)​$32,400
• C)​$36,000
• D)​$40,000
• E)​$44,000

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Definitions:

Mucosa

The moist, inner lining of some organs and body cavities, such as the nose, mouth, lungs, and stomach, involved in absorption and secretion.

Small Intestine

Portion of the digestive tube between the stomach and the cecum; consists of the duodenum, jejunum, and ileum.

Common Hepatic Duct

Part of the biliary duct system formed by the joining of the right and left hepatic ducts.

Bile Canaliculi

Small ducts between the liver cells that collect bile, contributing to its transport towards the bile ducts.