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Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day 400
Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: |
Average number of payments per day | 400 | ||
Average value of payment | $ | 990 | |
Variable lockbox fee (per transaction) | $ | .35 | |
Daily interest rate on money market securities | .068 | % | |
The total collection time will be reduced by four days if the lockbox system is adopted. |
a. | What is the PV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
PV | $ |
b. | What is the NPV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) |
NPV | $ |
c. | What is the net cash flow per day from adopting the lockbox system? Per check? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Net cash flow | $ per day |
Net cash flow | $ per check |
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