Rothesay Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the

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Rothesay 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 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 cheque?

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Related Book For answer-question

Fundamentals Of Corporate Finance

ISBN: 9781259654756

10th Canadian Edition

Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan, Gordon Roberts, J. Ari Pandes, Thomas Holloway

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Question Posted: Nov 21, 2022 03:34 AM

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Rothesay Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the

Question:

Average number of payments per day Average value of payment Variable lockbox fee (per transaction) Daily interest rate on money market securities 385 $975 $.35 .068%

Step by Step Answer:

a The present value of adopting the system is the number of days collections are reduced times the a...View the full answer

Fundamentals Of Corporate Finance

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