Your firm has an average receipt size of $60. A bank has approached you concerning a lockbox service that will decrease your total collection time by 3 days. You typically receive 9,500 checks per day. The daily interest rate is 0.019 percent. If the bank charges a fee of $180 per day, what is the NPV of the lockbox project? What would the net annual savings be if the service were adopted?

Your firm has an average receipt size of $60. A bank has approached you concerning a lockbox service that will decrease your total collection time by 3 days. You typically receive 9,500 checks per day. The daily interest rate is 0.019 percent. If the bank charges a fee of $180 per day, what is the NPV of the lockbox project? What would the net annual savings be if the service were adopted?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter17: The Management Of Cash And Marketable Securities

Section: Chapter Questions

Problem 2P

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Your firm has an average receipt size of $60. A bank has approached you concerning a lockbox service that will decrease your total collection time by 3 days. You typically
receive 9,500 checks per day. The daily interest rate is 0.019 percent. If the bank charges a fee of $180 per day, what is the NPV of the lockbox project? What would the net
annual savings be if the service were adopted?

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