Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities What is the NPV of the new lockbox system? NPV 830 $ 780 $0.15 5.0% Suppose in addition to the variable charge that there is an annual fixed charge of $5,000 to be paid at the end of each year. What is the NPV now? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) NPV $
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days. Assume 365 days a year. Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Annual interest rate on money market securities What is the NPV of the new lockbox system? NPV 830 $ 780 $0.15 5.0% Suppose in addition to the variable charge that there is an annual fixed charge of $5,000 to be paid at the end of each year. What is the NPV now? (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places. (e.g., 32.16)) NPV $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are
located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank
located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 1.5 days.
Assume 365 days a year.
Average number of payments per day
Average value of payment
Variable lockbox fee (per transaction)
Annual interest rate on money market securities
What is the NPV of the new lockbox system?
$
NPV
Suppose in addition to the variable charge that there is an annual fixed charge of $5,000 to be paid at the
end of each year. What is the NPV now? (Negative amount should be indicated by a minus sign.
Round your answer to 2 decimal places. (e.g., 32.16))
NPV
830
$ 780
$0.15
5.0%
$
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