You Are Considering Opening a Lockbox

question 46

Essay

You are considering opening a lockbox.Calculate the net benefit of the lockbox per day given the information provided.
$$\begin{array}{l}\begin{array} { | l | r | } \hline\text { Data: }\\\hline \text { Average number of daily payments to lockbox } & 450 \\\hline \text { Average value of payment } & \mathbf { \$ 3 , 0 0 0 } \\\hline \text { Rate of interest per day } & 0.015 \% \\\hline \text { Savings in mailing time (days) } & 1.1 \\\hline \text { Savings in processing time (days) } & 0.6 \\\hline \text { Bark charge per cheque } & \mathbf { \$ 0 . 3 0 } \\\hline\end{array}\end{array}$$

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Definitions:

Foreclosure Proceeding

A legal process by which a lender seeks to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as the collateral for the loan.

Redeem

To recover possession of something by paying a specified amount, or to fulfill a promise or obligation.

Default

Failure to fulfill an obligation, especially failure to meet a financial commitment or appear in a court of law.

Prepayment Penalty Clause

A provision in a contract that imposes a penalty on a borrower for paying off a loan before its maturity date.