1. Phil’s Carvings receives an average of 39 checks a day. The average amount per check is $1,560. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 2.2 days. The bank charges $.35 a check for this service. The daily interest rate on Treasury bills is .008 percent. What is the average daily cost of the lockbox system?
1.$11.16
2.$4.87
3.$13.65
4.$8.11
5.$19.19
2. Which of the following is not a risk that can be hedged?
A) Interest rate movements
B) Exchange rate movements
C) Flood
D) Commodity prices