Carter & Carter Is Considering Setting Up a Regional Lockbox

question 11

Multiple Choice

Carter & Carter is considering setting up a regional lockbox system to speed up collections.The company sells to customers all over the U.S., and all receipts come in to its headquarters in San Francisco.The firm's average accounts receivable balance is $2.5 million, and they are financed by a bank loan at an 11% annual interest rate.The firm believes this new lockbox system would reduce receivables by 20%.If the annual cost of the system is $15, 000, what pre-tax net annual savings would be realized?

• A) $29, 160
• B) $32, 400
• C) $36, 000
• D) $40, 000
• E) $44, 000

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Definitions:

Negative Consequences

Unfavorable outcomes or damages that result from an action or decision.

Reflexivity Of Knowledge

Reflexivity of knowledge suggests that knowledge is not just a passive reflection of reality but is influenced by the biases and perspectives of those who produce it.

Mutual Recognition

A concept in social and political theory emphasizing the reciprocal acknowledgement and respect of the rights, dignity, and agency of others as fundamental to ethical relations.

Mutual Display

The act of exhibiting or demonstrating something mutually among individuals or groups, often used in the context of social rituals and interactions.