Reference no: EM131570047
Question: Joe Cue, assistant treasurer at Ocean Floor Drilling, is evaluating his firm's disbursement system. He has determined that each check costs $1.10, while an ACH only costs $0.10. The firm's opportunity cost of funds is 5%. Joe estimates that it would cost about $15,000 to fully switch from check to ACH-based disbursements. Further, Joe expects that the firm will make 2,000 disbursements per year. Using the information from above, calculate the NPV of switching to ACH. Assume that the firm will remain a going concern in perpetuity.
Now, Joe wants to examine the sensitivity of the NPV with respect to the model's variables.
a. Upon further review, Joe determines that, in past years, the firm has had as few as 500 disbursements and as many as 10,000 disbursements. Calculate and interpret the NPVs for both scenarios.
b. Solve for the number of payments that results in an NPV of $0.
c. Now Joe wants to focus on opportunity cost. Specifically, he would like to know the maximum opportunity cost at which the decision to switch is still manageable. Accordingly, solve for the opportunity cost that results in an NPV of $0. Use the base assumption of 2,000 disbursements.
|
Example of benach marking for healthcare organization
: Find an example of benach marking for a healthcare organization.
|
|
Write a program which repeatedly reads numbers until
: Write a program which repeatedly reads numbers until the user enters "done". Once "done" is entered, print out the total, count, and average of the numbers.
|
|
Identify the critical traffic patterns currently used
: Identify the critical traffic patterns currently used by organization, supported by examples. Use Traffic Flow Wireshark Capturedocument to guide your response.
|
|
Botox facial care had earnings after taxes
: Botox facial care had earnings after taxes of $280,000 in 2009 with 200,000 shares of stock outstanding.
|
|
Calculate and interpret the npvs for both scenarios
: Now, Joe wants to examine the sensitivity of the NPV with respect to the model's variables. Calculate and interpret the NPVs for both scenarios
|
|
Find a way of dividing the campers into four canoes
: Bruce, Edgar, Eric, Herb, Maurice, Michael, Richard, and Roland decide to go on a week-long canoe trip in Labrador.
|
|
Briefly describe the nature of the study
: Briefly describe the nature of the study (problem, research questions or hypotheses, research methodology, procedures, participants, and results)
|
|
Decide to open retirement account at your local bank
: You decide to open a retirement account at your local bank that pays 8 percent/year/month (8 percent per year compounded monthly).
|
|
Calculate the number of units of each model
: In order for Fender to maximize profits, calculate the number of units of each model that should be manufactured
|