Item 17 A firm has daily cash receipts of P300,000 and is interested in acquiring a lockbox service in order to reduce collection time. Bank 1's lockbox service costs P3,000 per month and will reduce collection time by 3 days. Bank 2's lockbox service costs P5,000 per month and will reduce collection time by 4 days. Bank 3's lockbox service costs P500 per month and will reduce collection time by 1 day. Bank 4's lockbox service costs P1,000 per month and will reduce collection time by 2 days. If money market rates are expected to average 6% during the year, and the firm wishes to maximize income, which bank should the firm choose? Select the correct response: O Bank 3. O consistency O Bank 2. O Bank 4. O Bank 1.
Item 17 A firm has daily cash receipts of P300,000 and is interested in acquiring a lockbox service in order to reduce collection time. Bank 1's lockbox service costs P3,000 per month and will reduce collection time by 3 days. Bank 2's lockbox service costs P5,000 per month and will reduce collection time by 4 days. Bank 3's lockbox service costs P500 per month and will reduce collection time by 1 day. Bank 4's lockbox service costs P1,000 per month and will reduce collection time by 2 days. If money market rates are expected to average 6% during the year, and the firm wishes to maximize income, which bank should the firm choose? Select the correct response: O Bank 3. O consistency O Bank 2. O Bank 4. O Bank 1.
Chapter18: The Management Of Accounts Receivable And Inventories
Section: Chapter Questions
Problem 5P
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Question
Transcribed Image Text:Item 17
A firm has daily cash receipts of P300,000 and is interested in acquiring a lockbox service in order to reduce collection time. Bank 1's lockbox service costs
P3,000 per month and will reduce collection time by 3 days. Bank 2's lockbox service costs P5,000 per month and will reduce collection time by 4 days.
Bank 3's lockbox service costs
P500 per month and will reduce collection time by 1 day, Bank 4's lockbox service costs P1,000 per month and will reduce çollection time by 2 days, If
money market rates are expected to average 6% during the year, and the firm wishes to maximize income, which bank should the firm choose?
Select the correct response:
O Bank 3.
O consistency
O Bank 2.
O Bank 4.
O Bank 1
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