The Stetson Co

question 252

Multiple Choice

The Stetson Co. receives an average of 340 checks a day. The average amount per check is $750. The firm is considering a lockbox system which it anticipates will reduce the average collection time
By 2 days. The daily interest rate on Treasury bills is .006 percent. What is the amount of the
Expected daily savings of the lockbox system?

• A) $2.04
• B) $9.00
• C) $15.30
• D) $18.00
• E) $30.60

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Definitions:

Total Fertility Rate

The typical amount of children a woman is expected to have throughout her life, based on present fertility rates.

Replacement Rate

The ratio of a retiree's pension benefit to their earning before retirement, often used to measure the adequacy of retirement income.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Market Rate

The prevailing price or interest rate in the market for goods, services, or securities.