Question
Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of
Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of 1,000 payments per month, per-payment savings if 40 cents, annual cost of capital is assumed to be 5%.
a.What is the NPV of the decision to convert to ACH?
b.What is the minimum number of payments per month in order to justify the cost to convert to ACH disbursing?
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Financial Accounting
Authors: LibbyShort
7th Edition
78111021, 978-0078111020
