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Question content area top
Part 1
Float   Simon Corporation has daily cash receipts of
​$64,000.
A recent analysis of its collections indicated
that​ customers' payments were in the mail an average of
2.5
days. Once​ received, the payments are processed in
3
days. After payments are​ deposited, it takes an average
of
3
days for these receipts to clear the banking system.
a.  How much collection float​ (in days) does the firm
currently​ have?
b.  If the​ firm's opportunity cost is
11​%,
would it be economically advisable for the firm to pay an annual
fee of
​$16,800
for a lockbox system to reduce collection float by
4
​days?c. What would the​ company's opportunity cost have to
be to make the
​$16,800
fee​ worthwhile?
Question content area bottom
Part 1
a.  The amount of collection float​ (in days) the firm
currently has is
enter your response here
days.  ​(Round to one decimal​ place.)
Part 2
b.  The cost savings if the firm adopts the lockbox system
is
​$enter your response here.
​(Round to the nearest​ dollar.)
Part 3
Would it be economically advisable for the firm to pay an annual
fee of
​$16,800
to reduce collection float by
4
​days?The firm
▼
should
should not
accept the proposal because the savings is
▼
greater
less
than the costs.  ​(Select from the​ drop-down menus.)
Part 4
c. To make the
​$16,800
fee​ worthwhile, the​ company's opportunity cost would
have to be
enter your response here​%.
​(Round to two decimal​ places.)