How Much Money Can Be Saved Annually by Setting Up

question 3

Multiple Choice

How much money can be saved annually by setting up a lock-box system that will process 500 checks per day at a cost of $0.20 per check if each check averages $220,collection float is reduced by 3 days,and the annual interest rate is 8%?

• A) -$27,700
• B) -$10,100
• C) $10,000
• D) $16,400

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Definitions:

Expected Value

The mathematical average of all possible outcomes of a random variable, weighted by their respective probabilities.

Stocks

Shares of ownership in a company, which represent a claim on the company's earnings and assets.

Investment

Applying resources, typically financial, in order to gain income or profit.

Portfolio

An aggregation of financial instruments such as company shares, debt securities, tangible commodities, available cash, and cash-like resources, including mutual funds and ETFs.