Your firm has an average receipt size of $90. A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 9,100 checks per day. The daily interest rate is 0.019 percent. If the bank charges a fee of $200 per day, what is the NPV of the lockbox project? NPV What would the net annual savings be if the service were adopted? Net annual savings

Your firm has an average receipt size of $90. A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 9,100 checks per day. The daily interest rate is 0.019 percent. If the bank charges a fee of $200 per day, what is the NPV of the lockbox project? NPV What would the net annual savings be if the service were adopted? Net annual savings

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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You want to invest $24,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded quarterly. What is the effective rate of return that you will earn from this investment?
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 2 days. You typically receive 8,500 checks per day. The daily interest rate is 0.02 percent. If the bank charges a fee of $190 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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You are considering a safe investment opportunity that requires a $1,410 investment today, and will p $780 two years from now and another $830 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pa an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR wit the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is %. (Round to two decimal places.)
If you want to have $60,000 in 8 years, how much do you need to deposit in the bank today if the account pays an interest rate of 9%?
You have just opened a savings account which pays monthly interest at a rate of j12 = 5.5% p.a. You wish to accumulate $20,000 by depositing the same amount into the account at the end of each month, for 2 years, starting in a month's time. a) Determine the required size for the monthly deposit, R. Apply a sanity check. b) Construct a sinking fund table showing 24 deposits with a fixed interest rate of 5.5%. Describe and apply a sanity check to your table. c) Suppose that the interest rate is renewed every three months (quarterly) over the course of the two years as follows: Year 1 Q1 5.5% 02 Q3 2.8% 4.5% 04 01 4.0% 4.2% Year 2 Q2 04 03 3.8% 2.5% 7.5% If you maintain the same monthly deposit of R determined in part a), find the size of your sinking balance after two years. Will you meet your target of $20,000? Describe and apply a sanity check for your answer. d) Construct a sinking fund table showing 24 deposits with the variable interest rate. Describe and apply a sanity check to…
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You want to invest $18,000 and are looking for safe investment options. Your bank is offering you a certificate of deposit that pays a nominal rate of 6% that is compounded semiannually. What is the effective rate of return that you will earn from this investment?
Activity 2: Analyze the given situation. Answer the questions and write your answer on blank space. Suppose you have a P20,000 and you plan to save it for 2 years. Bank IPB offers 7% simple interest rate per year while bank ODB offers 5% compounded quarterly. Which of the two banks offer simple interest? Which one offers compound interest? Which of the two banks will make your savings grow faster? Box for OR code you snouru up-- that she really knows her stuff on this issue. #Vennfferentiate! Directions: Using a Venn diagram, differentiate the three different appeals to support a stand. Do it at the back o page and do not forget to be creative. realme Shot on realme C25
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