What Are the Expected Annual Savings from a Lock-Box System

question 7

Multiple Choice

What are the expected annual savings from a lock-box system that collects 150 cheques per day averaging $500 each, and reduces mailing and processing times by 2.5 and 1.5 days respectively, if the annual interest rate is 7 percent?

• A)$5,250
• B)$13,125
• C)$21,000
• D)$300,000 Annual savings = average collections x time saved x annual interest rate
• = 150 x $500 x (2.5 + 1.5) x .07

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Definitions:

Range

The difference between the largest and smallest values in a dataset, a measure of spread or variability.

Hypotheses

Theoretical statements set forth for experimentation that predict a possible relationship between two or more variables, which may include both null and alternative hypotheses.

Interquartile Range

A measure of statistical dispersion, equal to the difference between the upper and lower quartiles, representing the middle 50% of the data.

Outliers

Data points that significantly differ from other observations in a data set, often indicating measurement error or a novel phenomena.