Question
Your firm has an average receipt size of $85. A bank has approached you concerning a lockbox service that will decrease your total collection time
Your firm has an average receipt size of $85. A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 8,600 checks per day. The daily interest rate is 0.02 percent.
If the bank charges a fee of $180 per day, what is the NPV of the lockbox project?
NPV
A. $539520 B. $562000 C. $1461820 D. $584480 E. $3380
What would the net annual savings be if the service were adopted?
Net annual savings
A. $42556.12 B. $851.12 C. $44683.96 D. $40,428.34 E. $43407.27
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Advanced Accounting
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
10th edition
0-07-794127-6, 978-0-07-79412, 978-0077431808
