Chapter 27:
Questions and Problems 5: 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 receive 6,500 checks per day. The daily interest rate is 015 percent of the bank charges a fee of $160 per day, should the lockbox project be accepted? What would the net annual savings be if the service were adopted?
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