Question: Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of

  1. Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of 1,000 payments per month, per-payment savings if 40 cents, annual cost of capital is assumed to be 5%.
    1. What is the NPV of the decision to convert to ACH?
    2. What is the minimum number of payments per month in order to justify the cost to convert to ACH disbursing?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

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

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

One of PLE's manufacturing facilities produces metal engine housings from sheet metal for both mowers and tractors. Production of each product consists of five steps: stamping, drilling, assembly,...

Q:

Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of 1,000 payments per month,...

Q:

8. Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of 1,000 payments per month,...

Q:

1.Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-front investment costs of $40,000. Based on a perpetuity of 1,000 payments per month,...

Q:

please answer this question! 8. Sears is evaluating the choice between paper check disbursement and ACH disbursement. Sears would incur up-'ont investmenl costs of $40,000. Based on a perpetuity of...

Q:

The Williams Company can convert to ACH disbursing for $20,000. Williams averages a perpetual 500 checks per month and has an annual cost of capital of 10%. If ACH disbursing will save Williams 20...

Q:

It is becoming widely expected that interest rates will rise in the coming year. In recent weeks the 10 year US bond has risen from about 1.50% to 1.80%. Using the appendix for chapter 2 on Webster...

Q:

I have attached the case study and the rubric for this. can I get help here to organzie an answer? CATERPILLAR, INC: THE IMPACT OF DECISION BIASES AND RISK ON CAPITAL BUDGETING Timothy D. West...

Q:

Supply Chain Management Introduction Outline What is supply chain management? Significance of supply chain management. Push vs. Pull processes utdallas.edu/~metin 1 A Generic Supply Chain Sources:...

Q:

Please provide a maximum one-page summary of how we can analyze the cost of capital for our project (below) vis--visthe peer-reviewed research article attached. Consider risk as you decide. What...

Q:

I would like assistance with assignment 3 and 4 on the attached document I have been struggling with the subject and its my last AUI4863/102/0/2016 Tutorial letter 102/0/2016 ADVANCED INTERNAL AUDIT...

Q:

The 1-sun I-V curve for a 40-cell PV module in full sun is shown below along with an equivalent circuit for a single cell (including its 10? parallel resistance). An array with two such modules in...

Q:

Kedzie Kord Company had the following balance sheets and income statements over the last three years (in thousands): Cash Receivables Inventories Current assets. Net fixed assets Total assets...

Q:

Problem 4 : ( 3 points, 1 point each ) Suppose you're trying t o model a population o f bunnies. Initially there are 1 0 0 rabbits, and you notice that the growth rate i s 0 . 0 8 bunnie s d a y ....

Q:

Some commentators argue that the two-tiered corporate structure, with a management board and a supervisory board, prevalent in many Continental European countries, is better suited for addressing...

Q:

Compute the AMT exemption for the following taxpayers. a. Bristol, who is single, reports AMTI of $149,500. b. Marley and Naila are married and file a joint tax return. Their AMTI is $498,000.

Q:

The Heese Restaurant Group manufactures the bags of frozen French fries used at its franchised restaurants. Last week, Heeses purchased and used 101,000 pounds of potatoes at a price of $ 0.70 per...

Q:

Pennys Pool Service & Supply, Inc. (PPSS) is completing the accounting process for the year just ended, December 31, 2015. The transactions during 2015 have been journalized and posted. The following...

Q:

Desoto Company must make three adjusting entries on December 31, 2019. a. Supplies used, $5,500 (supplies totaling $9,000 were purchased on December 1, 2019, and debited to the Supplies account). b....

Q:

Use the graph to get the provided

Q:

3. Would you like to work at a Stew Leonards retail store? Develop your rationale for employment or nonemployment.

Q:

2. The book encourages readers to pay attention to what is happening around them, anticipate change, and look at the opportunities that exist outside their comfort zones. How does this reflect on...

Q:

2. Your goals play a key role in bringing purpose and direction to your life. Identify the short-term goals that are currently influencing your behavior. What long-term goals do you hope to achieve...