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Thrifty Corp.is establishing a lock-box system to reduce time in the collection process.They anticipate saving two days of mail time and.75 days of processing time through the system.Six hundred payments are expected to be collected daily, at an average size of $200.The appropriate interest rate is 6 percent per year.What is the break-even charge per item that you could consider paying to a bank for providing this service?
Option to Buy
A contract that gives the holder the right, but not the obligation, to purchase a specified asset at a set price within a specific timeframe.
Conversion Value
The worth of a convertible security if it was converted into a different security, typically shares of the issuing company, at the current market price.
Straight Bond Value
The present value of a bond's future interest payments and its redemption value at maturity.
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