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Solve the question Birds Eye Treehouses Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It
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Birds Eye Treehouses Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 2.5 days Assume 365 days a year. Average number of payments per day 840 Average value of payment $790 Variable lockbox fee (per transaction) $.20 Annual interest rate on money market securities 4%Bird's Eye Treehouses 1.What is the NPV of the new lockbox system? 2. Suppose in addition to the variable charge that there is an annual fixed charge of $4,000 to be paid at the end of each year. What is the NPV nowStep by Step Solution
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