Your firms average daily transaction consists of a sales order for $75,000. COGS is generally equal to 60% of the sale. Assume that your firms DPO is 15 days and that the operating cycle is 80 days. Further, the discount rate used for valuing working capital decisions is 9%.

a. Calculate the NPV of the typical sales transaction.

b. Recalculate the NPV, assuming an increase in DPO to 30 days.

c. Estimate the all-in effect of the increase in DPO using a daily perpetuity approach.