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MLX has annual sales of $320 million per year and has calculated the collection float to be 12 days. If MLX is currently paying 9.35% on its line of credit, what amount of interest expense could be saved if the collection float is reduced by 3 days? (Assume 365 days per year.

Answer :

CRICETUSGO

Answer:

The right solution is "$245,917.81".

Explanation:

According to the question,

Interest,

= 9.35%

Sales,

= 320000000

Float reduction,

= 3

Now,

Saving in interest will be:

= [tex]Sales\times Interest\times \frac{Float \ reduction}{365}[/tex]

By substituting the values, we get

= [tex]320000000\times 9.35 \ percent\times \frac{3}{365}[/tex]

= [tex]245,917.81[/tex] ($)

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