Bird's Eye Treehouses, Inc , a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area It therefore is considering using a lockbox system offered by a bank located in Pittsburgh The bank has estimated that use of the system will reduce collection time by 2 days Average number of payments per day 770 Average value of payment $ 720 Variable lockbox fee (per transaction) $ 20 Annual interest rate on money market securities 5 3 What is the NPV of the new lockbox system (Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) NPV $ Suppose in addition to the variable charge that there is an annual fixed charge of $4,000 to be paid at the end of each year What is the NPV now (A negative answer should be indicated by a minus sign Do not round intermediate calculations and round your answer to 2 decimal places, e g , 32 16 ) NPV $

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Posted on Oct 03, 2024

Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering

Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 2 days.


Average number of payments per day		770
Average value of payment	$	720
Variable lockbox fee (per transaction)	$	.20
Annual interest rate on money market securities		5.3	%

What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV

Suppose in addition to the variable charge that there is an annual fixed charge of $4,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

NPV