Question
Value of Lockboxes: Twenty Matchbox Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments
Value of Lockboxes: Twenty Matchbox Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following:
Average number of payments per day 7,600
Average value of payment $ $ 120
Variable lockbox fee (per transaction)$ $ 0.02
Daily interest rate on money market securities 0.03%
The total collection time will be reduced by 5 days if the lockbox system is adopted. Calculate the present value of adopting the system, the NPV of adopting the system, the net cash flow per day from adopting, and the net cash flow per check from adopting. ( Hint: Remember that when converting from percents to decimals, you must move the decimal point two places to the left. )
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