Childers, Inc

question 136

Multiple Choice

Childers, Inc. operates primarily in the Southeast but has a number of customers in Phoenix who remit about 8,000 checks a year.  The average check is $2,400.  It currently takes the Phoenix checks an average of seven days after mailing to clear into Childers' account.  A Phoenix bank has offered Childers a lock box system for $2,400 a year plus $.22 per check.  This will reduce the clearing time for the checks to four days.  How much will the lock box system save Childers if it borrows at 11%?

• A)$157,808
• B)$13,199
• C)$17,359
• D)$4,160

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