What is NPV of accepting the lockbox agreement

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Reference no: EM131355073

Your firm has an average receipt size of $130. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 6,000 checks per day. The daily interest rate is .018 percent. The bank charges a lockbox fee of $185 per day.

1. What is the NPV of accepting the lockbox agreement?

2. What would the net annual savings be if the service were adopted?

Reference no: EM131355073

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