MENU
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 organization's marginal cost of capital was 6.2%?
Suggested Answer: B
Get Premium ICBB Questions
as Interactive Web-Based Practice Test or PDF
Real Exam Format
Detailed Explanations
Instant Access
Get Your Practice Test
6 comments · newest first
TE
Terrilyn
5 days ago
I think it’s option B, right?
DE
Delfina
10 days ago
That's a $1.4M reduction in receivables!
SH
Sherman
15 days ago
I'm really unsure about this one. I thought the savings would be higher, but I can't remember how to factor in the total accounts receivable.
CA
Carlota
20 days ago
I believe the savings would be calculated as the reduction amount times the marginal cost of capital. I think I might have seen an answer close to $86,800 in a previous example.
ON
Oneida
25 days ago
This seems similar to a practice question we did on cash flow savings. I feel like the formula involves multiplying the reduction by the marginal cost of capital, but I can't recall the exact steps.
CE
Celestina
1 month ago
I think I remember something about calculating savings based on the reduction in accounts receivable, but I'm not entirely sure how to apply the marginal cost of capital here.