Roze Corporation Is Investigating a Lockbox System to Reduce Its

question 299

Multiple Choice

Roze Corporation is investigating a lockbox system to reduce its collection time. It has determined that on average, there are 405 payments with an average value of $1,200 each. If a lockbox system
Is implemented, the lockbox fee per transaction will be $0.65. If the collection time can be reduced
By 4 days, and the daily interest on money market securities is .03%, then determine the net
Present value of adopting the system.

• A) $1,166,500
• B) $1,066,500
• C) $996,500
• D) $886,500
• E) $776,500

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Definitions:

Endorsement

The act of signing one's name on the back of a check or other negotiable instrument, or adding a provision to an insurance policy, indicating approval or transfer of rights.

Payee

The individual or entity to whom money is paid or owed, especially in the context of checks or electronic transfers.

Fraud

Deceptive action designed to provide an unfair advantage or benefit to the individual or entity committing the fraud.

HDC

Holder in Due Course, a term in negotiable instruments law referring to someone who has acquired a negotiable instrument in good faith for value, with certain protections.