The PMI, Inc. processes an estimated 200,000 checks per year from its customers. Total revenue
collected by check is $40,000,000.
The average float time until the funds are credited to PMI's
checking account is 6 days. For an extra cost of $ .06/check, PMI's bank will install a lock-box
system that will reduce float time from 6 days to 2.5 days. If PMI earns 3.5% on its checking
account, how much per check will PMI make if it uses the lock-box system?
A) $.005 B) $.008 C) $.006 D) $.007
D
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A predetermined overhead allocation rate is used to allocate direct materials costs to various processes or departments
Indicate whether the statement is true or false
Paramount Carpets is considering purchasing new equipment costing $730,000
The company's management has estimated that the equipment will generate cash flows as follows: Year 1 $204,000 2 204,000 3 266,000 4 266,000 5 150,000 Considering the residual value is zero, calculate the payback period. (Round your answer to two decimal places.) A) 4.61 years B) 3.21 years C) 3.42 years D) 3.70 years