Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day. Average value of payment Variable lockbox fee (per transaction) Daily interest rate on money market securities 405 $995 $.30 .068% The total collection time will be reduced by three days if the lockbox system is adopted. a. What is the PV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) b. What is the NPV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) c. What is the net cash flow per day from adopting the lockbox system? Per check? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following: Average number of payments per day. Average value of payment Variable lockbox fee (per transaction) Daily interest rate on money market securities 405 $995 $.30 .068% The total collection time will be reduced by three days if the lockbox system is adopted. a. What is the PV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) b. What is the NPV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole dollar amount, e.g., 32.) c. What is the net cash flow per day from adopting the lockbox system? Per check? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
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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![Problem 19-07 Value of Lockboxes [LO2]
Paper Submarine Manufacturing is investigating a lockbox system to reduce its
collection time. It has determined the following:
Average number of payments per day
Average value of payment
Variable lockbox fee (per transaction)
Daily interest rate on money market
securities
a.
The total collection time will be reduced by three days if the lockbox system is adopted.
a. What is the PV of adopting the system? (Do not round intermediate calculations and
round your answer to the nearest whole dollar amount, e.g., 32.)
b. What is the NPV of adopting the system? (Do not round intermediate calculations
and round your answer to the nearest whole dollar amount, e.g., 32.)
c. What is the net cash flow per day from adopting the lockbox system? Per check? (Do
not round intermediate calculations and round your answers to 2 decimal places,
e.g., 32.16.)
b.
C.
405
$995
$.30
PV
NPV
Net cash flow
Net cash flow
.068%
per day
per check](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5563032d-0248-47c3-9c13-d544f16b0b1d%2Fc4b42401-4290-4995-a782-7eceaaab2122%2F539i9zv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 19-07 Value of Lockboxes [LO2]
Paper Submarine Manufacturing is investigating a lockbox system to reduce its
collection time. It has determined the following:
Average number of payments per day
Average value of payment
Variable lockbox fee (per transaction)
Daily interest rate on money market
securities
a.
The total collection time will be reduced by three days if the lockbox system is adopted.
a. What is the PV of adopting the system? (Do not round intermediate calculations and
round your answer to the nearest whole dollar amount, e.g., 32.)
b. What is the NPV of adopting the system? (Do not round intermediate calculations
and round your answer to the nearest whole dollar amount, e.g., 32.)
c. What is the net cash flow per day from adopting the lockbox system? Per check? (Do
not round intermediate calculations and round your answers to 2 decimal places,
e.g., 32.16.)
b.
C.
405
$995
$.30
PV
NPV
Net cash flow
Net cash flow
.068%
per day
per check
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