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Joe Cue, assistant treasurer at Ocean Floor Drilling, is evaluating his firm's disbursement sys tem. He has determined that each check costs $1.10, while an
Joe Cue, assistant treasurer at Ocean Floor Drilling, is evaluating his firm's disbursement sys tem. He has determined that each check costs $1.10, while an ACH only costs $0.10. The firm's opportunity cost of funds is 5 from check to ACH-based disbursements. Further, Joe expects that the firm will make 2,000 disbursements per year. Using the information from above, calculate the NPV of switching to 2. %. Joe estimates that it would cost about S 15,000 to fully switch ACH. Assume that the firm will remain a going concern in perpetuity
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