Your firm has an average receipt size of $175. A bank has approached

jagguarpaw January 9, 2017 0 Comments

Question: Your firm has an average receipt size of $175. A bank has approached

Your firm has an average receipt size of $175. A bank has approached you concerning a lockbox service that will decrease your total collection time by one day. You typically receive 6,500 checks per day. The daily interest rate is .017 percent. The bank charges a lockbox fee of $160 per day.
What is the NPV of accepting the lockbox agreement? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
NPV $ 196,323.53
What would the net annual savings be if the service were adopted? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Net annual savings $