Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the
Question:
Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following:
Average number of payments per day..... 385
Average value of payment........... $975
Variable lockbox fee (per transaction) ...... $.35
Daily interest rate on money market securities...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?
b. What is the NPV of adopting the system?
c. What is the net cash flow per day from adopting? Per check?
Step by Step Answer:
Input Area Average of payments per day 385 Average v...View the full answer
Fundamentals of corporate finance
ISBN: 978-0078034633
10th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Related Video
The time value of money (TVM) is the concept that the money you have in your pocket today is worth more than the same amount would be if you received it in the future because of the profit it can earn during the interim.
Students also viewed these Corporate Finance questions
-
Value of Lockboxes paper submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following. The total collection time will be reduced by three...
-
A graphing calculator has determined the following exponential regression equation: y = a*bx, a = 28,158.50, b = 0.815. a. What is the rate of depreciation for this car? b. How much is this car worth...
-
Global Manufacturing. Inc. is considering using a lockbox system to speed up collections from its customers. They have two proposals to consider: one from U.S. Bank, and one from Wells Fargo Bank to...
-
Using the Internet, explore the most useful mobile applications for a business or industry of your choice. Also explore mobile applications for this business or industry that are not currently...
-
The beams shown in the figure are subjected to bending moments M = 250N m. Each beam has a rectangular cross section with height h = 44mm and width b = 10mm (perpendicular to the plane of the...
-
1. Does William Hundert describe a specific type of life that one should lead? If so, what are its elements? 2. Does Sedgewick Bell lead that type of life? Is he committed to any specific view or...
-
A woman is riding a bicycle down an \(18 \%\) slope. Her velocity is \(25 \mathrm{~km} / \mathrm{hr}\) into an oncoming \(25-\mathrm{km} / \mathrm{hr}\) wind. The air is at \(15{ }^{\circ}...
-
A balloon initially contains 65 m3 of helium gas at atmospheric conditions of 100 kPa and 22°C. The balloon is connected by a valve to a large reservoir that supplies helium gas at 150 kPa and...
-
Masons Masons is a professional accounting and consultancy firm specialising in audit, tax and consultancy services, operating in three main offices located in Melbourne, Sydney and Auckland. Masons...
-
A young woman named Seema (22) succumbed to injuries at a private hospital inGuwahati on 1st June, 2013 due to multiple organ failure as she had developedsevere health issues due to swallowing acid....
-
A mail-order firm processes 5,300 checks per month. Of these, 60 percent are for $43 and 40 percent are for $75. The $43 checks are delayed two days on average; the $75 checks are delayed three days...
-
Birds 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...
-
The following selected accounts and balances appear on the adjusted trial balance for Waverly, Inc., on July 31, 2016: Service Revenue ................................... $1,800 Rent Expense...
-
A global manager is evaluating options for foreign investment in an emerging market. The manager should select a market that represents all of the factors below EXCEPT for which one? Select answer...
-
2. Analyze the data from China, Japan, Switzerland, Indonesia, Ukraine, and Taiwan (6 countries), and fill in the table as follow showing overvalued and undervalued currencies. (10%) Write a...
-
Using the relative contribution of the B to the overall expected portfolio return, show whether index leverage or single-stock leverage results in better leverage for a portfolio manager who is good...
-
How much risk is appropriate for a government-run annuity system? Is there an appropriate risk-return calculation to be made? Is Social Security risk free? What about political risk?
-
1. Should managers try to maximize market value of equity or to maximize the accounting value of equity in the balance sheet? Why? 2. What is your understanding of the relationship between risk and...
-
Solve the Initial Value Problem. y' 3y + 12 = 0, y(2) = 1
-
Question 6.10 Current and deferred tax worksheets and tax entries From the hip Ltd?s statement of profit or loss for the year ended 30 June 2007 and extracts from its statements of financial position...
-
Three commonly reported measures of price level are the consumer price index, the producer price index, and the GNP deflator. Explain why these measures may yield different inflation rates.
-
Fyre, Inc., has a target debt-equity ratio of .85. Its WACC is 9.9 percent, and the tax rate is 35 percent. a. If the company's cost of equity is 14 percent, what is its pretax cost of debt? b. If...
-
Caughlin Company needs to raise $65 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. The company...
-
Photochronograph Corporation (PC) manufactures time series photographic equipment. It is currently at its target debt-equity ratio of .60. It's considering building a new $65 million manufacturing...
-
The partners mehak and simran share in the profits and losses equally and their capital accounts have credit balance s of 1 5 0 0 0 and 2 5 0 0 0 respectively. The account balances for Mehak and...
-
LNS Corporation reports book profit of $ 2 , 0 0 0 , 0 0 0 . The $ 2 , 0 0 0 , 0 0 0 included $ 1 5 , 0 0 0 of tax exempt interest income, a capital loss of $ 2 , 0 0 0 , depreciation expense of $ 6...
-
Maggie Vitteta, single, works 3 8 hours per week at $ 1 9 . 0 0 an hour. How much is taken out for federal income tax?
Study smarter with the SolutionInn App