Cow Chips, Inc., a large fertilizer distributor based in California, is planning to use a lockbox system to speed up collections from its customers located on the East Coast. A Philadelphia-area bank will provide this service for an annual fee of $15,000 paid at the end of the year plus 10 cents per transaction. The estimated reduction in collection and processing time is one day. Treasury bills are currently yielding 5 percent per year.

Problem 27-12 Calculating Transactions Required Cow Chips, Inc., a large fertilizer distributor based in California, is planning to use a lockbox system to speed up collections from its customers located on the East Coast. A Philadelphia-area bank will provide this service for an annual fee of $15,000 paid at the end of the year plus 10 cents per transaction. The estimated reduction in collection and processing time is one day. Treasury bills are currently yielding 5 percent per year. If the average customer payment in this region is $4,800, how many customers are needed, on average, each day to make the system profitable for Cow Chips? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Number of customers per day Problem 28-14 Credit Policy Evaluation The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy $ 104 $ 47 3,240 New Policy $ 108 $ 47 3,295 Calculate the NPV of the decision to change credit policies. (Do not round intermediate calculations.) NPV $ referencesebook & resources Problem 28-18 Credit Markup The Harrington Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) Price per unit Cost per unit Unit sales per month Break-even price referencesebook & resources Current Policy $ 104 $ 47 3,240 New Policy ? $ 47 3,400 $