5. 5. NPV and collection time [LO 19.2] Your firm has an average receipt size of $125....

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5. 5.

NPV and collection time [LO 19.2] Your firm has an average receipt size of $125. A bank has approached you concerning a service that will decrease your total collection time by two days. You typically receive 5 100 cheques per day. The daily interest rate is 0.016 per cent. If the bank charges a fee of $175 per day, should the bank's service project be accepted? What would the net annual savings be if the service were adopted?

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