Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
No More Books Corporation has an agreement with Floyd Bank whereby the bank hardies $3.2 million in collections a day and requires a $260,000 compensating
No More Books Corporation has an agreement with Floyd Bank whereby the bank hardies $3.2 million in collections a day and requires a $260,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region so that two other banks will handle its business. Banks A and B will each handle $1.6 million of collections a day, and each requires a compensating balance of $110,000. No More Books' financial management expects that collections will be accelerated by one day if the eastern region is divided. What is the NPV of accepting the system? NPV $ What will be the annual net savings? Assume that the T-bill rate is 2.6 percent annually. Annual net savings $ No More Books Corporation has an agreement with Floyd Bank whereby the bank hardies $3.2 million in collections a day and requires a $260,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region so that two other banks will handle its business. Banks A and B will each handle $1.6 million of collections a day, and each requires a compensating balance of $110,000. No More Books' financial management expects that collections will be accelerated by one day if the eastern region is divided. What is the NPV of accepting the system? NPV $ What will be the annual net savings? Assume that the T-bill rate is 2.6 percent annually. Annual net savings $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started