Maurice Tutor

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Algebra,Applied Sciences,Biology,Calculus,Chemistry,Economics,English,Essay writing,Geography,Geology,Health & Medical,Physics,Science Hide all
Teaching Since: May 2017
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Education

  • MCS,PHD
    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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  • Professor
    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 05 Aug 2017 My Price 9.00

Builders Circle,

ST2. Builders Circle, a hardware and building supplies company, processes all its cus- tomer credit card payments at its Atlanta headquarters. A Boston bank has offered to process the payments from Builders Circle customers located in the New England region for $50,000 per year plus $0.20 per payment. No compen- sating balance will be required. Under this lockbox arrangement, the average mailing time for payments would be reduced from 3 days to 1.5 days. Check processing and clearing time would be reduced from 5 days to 2. Annual collec- tions from the New England region are $292 million. The total number of pay- ments received annually is 600,000 (an average of 50,000 credit card holders x 12 payments per year). Assume that any funds released by this lockbox arrange- ment can be invested by Builders Circle to earn 10 percent per year before taxes.

 

 

 

The establishment of a lockbox system for the New England region will reduce payment processing costs at its Atlanta headquarters by $40,000 per year. Using this information, determine

a. The amount of funds released by this lockbox arrangement

b. The annual (pretax) earnings on the released funds

c. The annual fee that Builders Circle must pay the Boston bank for processing the payments

d. The annual net (pretax) benefits Builders Circle will receive by establishing this lockbox arrangement with the Boston bank

Answers

Maurice Tutor
(5)
Status NEW Posted 05 Aug 2017 10:08 PM My Price 9.00

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