What dollar amount of savings would a project show if it reduced your outstanding Accounts Receivable by $1.4 million dollars to $5.3 million total and your organizations marginal cost of capital was 6.2%?
What dollar amount of savings would a project show if it reduced your outstanding Accounts Receivable by $1.4 million dollars to $5.3 million total and your organizations marginal cost of capital was 6.2%?
To determine the dollar amount of savings due to a reduction in outstanding Accounts Receivable, we use the formula for the savings: Savings = Reduction in Accounts Receivable * Marginal Cost of Capital. Here, the reduction in Accounts Receivable is $1.4 million and the marginal cost of capital is 6.2%. Therefore, the calculation would be $1,400,000 * 6.2% which equals $86,800. Thus, the project would result in savings of $86,800.
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Pls someone help me to solve this qtn
1400000*6.2%=86800