Multiple Choice
Whitmer Inc.sells to customers all over the U.S. ,and all receipts come in to its headquarters in New York City.The firm's average accounts receivable balance is $2.5 million,and they are financed by a bank loan at an 6.75% annual interest rate.The firm is considering setting up a regional lockbox system to speed up collections,and it believes this 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) $22,313
B) $16,313
C) $18,750
D) $21,375
E) $20,438
Correct Answer:
Verified
Correct Answer:
Verified
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