A Firm That Is Located in New York Receives on the Average

question 67

Multiple Choice

A firm that is located in New York receives on the average 2,000 checks a day from its customers in the Twin Cities area.Average payment per check is $1,500.A bank in the Twin Cities is offering a lock-box arrangement for collection and processing of these checks at a cost of $0.50 per check.This arrangement will reduce the float by 2 days.The daily interest rate for the firm is 0.02%.What is the net saving from the lock-box arrangement?

• A) $200
• B) $400
• C) $1,000
• D) $1,200

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Definitions:

Distributive Negotiation

Negotiation in which each party makes claims for certain preferred outcomes.

Win-Lose Claims

Situations or assertions in which one side gains what the other side loses, typically in disputes or negotiations.

Minimum Reservation Point

is the lowest or least favorable outcome one is willing to accept in a negotiation or deal.

Maximum Reservation Point

The highest price a consumer is willing to pay for a good or service, beyond which they will choose not to purchase it.