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Your firm has an average receipt size of $ 1 2 0 . A bank has approached you concerning a lockbox service that will decrease

Your firm has an average receipt size of $120. A bank has approached you concerning a
lockbox service that will decrease your total collection time by two days. You typically
receive 7,400 checks per day. The daily interest rate is .017 percent. The bank charges a
lockbox fee of $170 per day.
a. What is the NPV of accepting the lockbox agreement? (Do not round intermediate
calculations and round your answer to 2 decimal places, e.g.,32.16.)
b. What would the net annual savings be if the service were adopted? (Use 365 days a
year. Do not round intermediate calculations and round your answer to 2 decimal
places, e.g.,32.16.)
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