Roxy Is Evaluating a Lock-Box System That Will Reduce Float

question 38

Multiple Choice

Roxy is evaluating a lock-box system that will reduce float by 6 days.The firm has annual sales of $180 million and an opportunity cost of 12%.If the lock-box system is adopted,what is the value of funds released?

• A) $ 493,150.68
• B) $ 355,068.49
• C) $ 59,178.08
• D) $ 2,958,904.11

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, with holders possibly entitled to vote on corporate matters and receive dividends.

Equipment

Tangible assets used in operations, such as machinery, computers, and furniture, which are expected to be used over several years.

Note Payable

A written promise to pay a specific sum of money on a future date or dates, typically with interest.

Journal Entry

A record in accounting that notes the debit and credit effects of a financial transaction.