Your firm has an average receipt size of $130. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 6,000 checks per day. The daily interest rate is .018 percent. The bank charges a lockbox fee of $185 per day.

1.What is the NPV of accepting the lockbox agreement?

2.What would the net annual savings be if the service were adopted?