Martin Inc

question 129

Multiple Choice

Martin Inc.is considering a lockbox system that will increase its check processing cost by $.15 per check.The company estimates an average check size of $1,700 and expects the lockbox to reduce check collection time by 3 days.What annual before-tax yield must Martin Inc.earn on its marketable securities for the lockbox system to be beneficial?

• A) 1.825%
• B) 1.118%
• C) 1.074%
• D) 0.735%

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Definitions:

Appropriate Suppliers

Vendors or providers that meet specific criteria for quality, reliability, and ethical standards, suitable for a business's needs.

Transportation Of Goods

The process of moving products from one location to another, often involving various modes of transport such as trucks, ships, or planes.

Inventory Carrying Costs

The total costs associated with holding and storing inventory, including warehousing, insurance, depreciation, and opportunity costs.

Service Costs

Expenses associated with the delivery of a service, including labor, materials, and overheads.