Question: NPV and Collection time your firm has an average receipt size of $95. A ban has approached you concerning a lockbox service that will decrease

NPV and Collection time your firm has an average receipt size of $95. A ban has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 9,400 checks per day. The daily interest rate is .016 percent. If the bank charges a fee of $190 per day, should the lockbox project be accepted? What would the net annual savings be if the service were adopted?

Step by Step Solution

★★★★★

3.43 Rating (156 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The average daily collections are the number of checks received times the average value of a check s... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

29-B-C-F-F-P-M (44).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

Your firm has an average receipt size of $127. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 4,950 checks per...

Your firm has an average receipt size of $125. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 6,400 checks per...

Your firm has an average receipt size of $117. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 6,500 checks per...

Problem 27-5 NPV and Collection Time Your firm has an average receipt size of $130. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days....

Problem 2 7 - 5 NPV and Collection Time Your firm has an average receipt size of $ 1 3 0 . A bank has approached you concerning a lockbox service that will decrease your total collection time by two...

NPV and Collection Time Your firm has an average receipt size of $117. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically...

NPV and Collection Time Your firm has an average receipt size of $127. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically...

Your firm has an average receipt size of $ 9 5 . A bank has approached you concerning a lockbox service that will decrease your total collection time by 2 days. You typically receive 9 , 4 0 0 checks...

Your firm has an average receipt size of $95. A bank has approached you concerning a lockbox service that will decrease your total collection time by 3 days. You typically receive 8,600 checks per...

Your firm has an average receipt size of $ 9 5 . A bank has approached you concernin! lockbox service that will decrease your total collection time by 2 days. You typic receive 8 , 6 0 0 checks per...

The face amount of a bond is what you can sell it for. Do you agree? Explain.

XYZ Corporation issues a 5 -year, 8%, $100,000 Bond. The bond is dated January 2000 and Interest is paid semiannually on January, 1st and July 1st. a) If the bond is issued at 1.05 on January 1st,...

What is a key disadvantage of the situational management style mentioned in the video? Group of answer choices It can lead to employee resentment due to lack of input. It discourages innovation by...

1. You are planning your expenditures for the upcoming school semester. You assume that this years expenditures will equal last years plus 2%. What approach to budgeting are you using? 2. You are...

Eta Company would like to examine the sales margin and asset components of return on investment for three of its divisions and has accordingly prepared the following information: Required(a) Compute...

Mr. Sam K. Jones, a successful businessman, is considering erecting a small building on a commercial lot he owns very close to the center of town. A local furniture company is willing to lease the...

Hot and cold liquids are mixed at the junction of two pipes. The temperature of the resulting mixture is to be controlled using a control valve on the hot stream. The dynamics of the mixing process,...

Air at 50% relative humidity is cooled isobarically at I atm absolute from 90C to 25C. (a) Estimate the dew point and degrees of superheat of the air at 90C. (b) How much water condenses (mol) per...

In reporting the results of a study, explain why a distinction should be made between statistical significance and significance as the term is used in ordinary language.

Jackson Electrical, one of the largest generator dealers in Phoenix, sells about 2,000 generators a year. The cost of placing an order with its supplier is $750, and the inventory carrying costs are...

Tanzaniqe, Inc., sells $200,000 of its accounts receivable to factors at a 5 percent discount. The firms average collection period is 90 days. a. What is the dollar cost of the factoring service? b....

A company increasing its credit terms for customers from 1/10, net 30 to 1/10, net 60 will likely experience: a. An increase in cash on hand. b. An increase in the average collection period. c....

Mean? Median? Sample standard deviation? aneOnline ? HELP 54 randomly selected students were asked how many siblings were in their family. Let X represent the number of pairs of siblings in the...

Recording Inventory Purchases and Sales on Account - Note: Round your answers to the nearest whole dollar. c. On January 14 , Shoppers Inc. pays the balance for purchases on account

c. Computer Wizard's bank provided the following statement as of December 31 , 2018: Computer Wizard hired an accounting assistant, Joe John, who accidentally deleted some of Computer Wizard's...