Question 8

Problem 27-10 NPV and Reducing Float No More Books Corporation has an agreement with Floyd Bank, whereby the bank andles \\( \\$ 3.5 \\) million in collections a day and requires a \\( \\$ 350,000 \\) compensating palance. No More Books is contemplating canceling the agreement and dividing its eastern region so that two other banks will handle its business. Banks A and B will each andle \\$1.75 million of collections a day, and each requires a compensating balance of \\$180,000. No More Books' financial management expects that collections will be accelerated by one day if the eastern region is divided. What is the NPV of accepting the system? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.) . What will be the annual net savings? Assume that the T-bill rate is 2.3 percent annually. (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., \\( 1,234,567 \\).)