If a lock box system that is able to collect 200 cheques per day that average $700 each can reduce processing time by 3 days, what are the annual expected savings if the annual interest rate is 4%? $5,600 $420,000 $16,800 $168,000

Finance Aug 12, 2020

If a lock box system that is able to collect 200 cheques per day that average $700 each can reduce processing time by 3 days, what are the annual expected savings if the annual interest rate is 4%?

$5,600

$420,000

$16,800

$168,000

Expert Solution

Computation of the annual savings:-

Annual savings = Average collections * Time saved * Annual interest rate

= 200 * $700 * 3 * 4%

= $16,800

Correct option is 3). $16,800

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