Fast Delivery Service Has Received a Proposal from Its Bank

question 138

Essay

Fast Delivery Service has received a proposal from its bank to establish a lock-box system to accelerate the receipt of $600 million annually on 900,000 checks.By its own analysis Fast Delivery believes such a system would decrease total float by 3.5 days.If Fast Delivery Service can earn 7 percent before taxes on the released funds,what is the maximum that Fast Delivery Service should be willing to pay the bank per check for the service?
Use a 365-day year.

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Definitions:

Classical Conditioning

An educational process which happens when a stimulus from the environment is linked to a naturally occurring stimulus.

UCS

Unconditioned Stimulus, a stimulus that naturally and automatically triggers a response without prior learning in classical conditioning.

Meat Powder

A substance used by Ivan Pavlov in his classical conditioning experiments as an unconditioned stimulus to elicit salivation in dogs.

Taste Cue

A sensory signal related to food that can trigger specific eating behaviors or preferences.