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The Denver Bakery Products Company currently collects all of its customer payments in Denver

The Denver Bakery Products Company currently collects all of its customer payments in Denver
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Price: $7.99
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FINANCE

B5. (Lockbox) The Denver Bakery Products Company currently collects all of its customer payments in Denver. By going to a new lockbox system with boxes in Denver, Boston, and Atlanta, Denver Bakery Products can reduce the total time it takes to convert customer payments into available funds by an average of 2.50 days. The firm collects an average of $120,000 per day. The extra costs associated with the lockbox system are $7,500 per year. The opportunity cost of funds is 6% per year. What is the expected annual profit of using the new system?

 

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