ACH payment allows the company to be eligible for a 0.5% discount. The amount of a typical transaction is $20,000 and the existing credit terms are net 45. Paying by a paper check will produce 5 days of disbursement float whereas paying by ACH will produce 2 days of disbursement float. Assume the disbursement is initiated day 50, and the firms WACC is 11%.

a) What is the PV of paying by paper check and by ACH and what discount rate would leave this company indifferent between ACH and paper check?