Your firm has an average receipt size of $155. A bank has approached you concerning a lockbox service that will decrease your total collection time by one day. You typically receive 6,700 checks per day. The daily interest rate is 0.016 percent. The bank charges a lockbox fee of $120 per day.
a. What is the NPV of accepting the lockbox agreement? (Round your answer to 2 decimal places. (e. g., 32.16))
NPV $
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 final answer to 2 decimal places. (e. g., 32.16))
Net annual savings $
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Your firm has an average receipt size of $155. A bank has approached you concerning a lockbox servic...
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