Burke Corporation Is Investigating a Lockbox System to Reduce Its

question 354

Multiple Choice

Burke Corporation is investigating a lockbox system to reduce its collection time. It has determined that on average, there are 900 payments with an average value of $425 each. If a lockbox system
Is implemented, the lockbox fee per transaction will be $0.15. If the collection time can be reduced
By 4 days, and the daily interest on money market securities is .02%, then determine net present
Value of adopting the system.

• A) $875,000
• B) $865,000
• C) $855,000
• D) $845,000
• E) $835,000

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Definitions:

Equilibrium Price

Equilibrium Price is the market price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Deductible

The dollar sum of (for example, health care) costs that an insured individual must pay before the insurer begins to pay.

Elective Surgical Procedure

A surgery that is planned in advance and is not essential to save life or limb but may enhance the quality of life or physical appearance.

Equilibrium Price

The price at which the quantity of a good or service demanded by consumers matches the quantity supplied by producers, leading to a balance in the market.