1. Use Equation 10.1 to determine which of the following will lead to an increase in the NPV when switching from checks to ACH:

a. A decreased number of disbursements (assume that cost savings exist)

b. An increase in the cost of processing a check relative to an ACH

c. A decrease in the opportunity cost

d. An increase in the up-front cost of conversion

rt-Term Financial Management # of Disbursements* Cost Savings-Up-front Cost NPV , where i represents the discount rat e. Applying Equation (10.1) results in .40 NPV 12,000 S - $40,000 - $8,000 0.10 291300 491