A company receives on average 1,000 checks with average value $800. The company is considering four (4) lock boxes. The bank agrees to go to the post office two times a day process checks and deposit checks with same day clearing. The bank is saving the company 3 days. The bank is charging $0.15 per check to process it and $25 day wire transfer to the companys main bank at end of each day. The companys hurdle return per year is 18.25% and per day is 18.25%/365 = .05%.

Please show all work.

a. How much is the total benefits for all 4 boxes?

b. How much is the present value of the perpetual bank fees?

c. How much is the NPV? Should it go ahead with this arrangement?