What is the npv of the new lockbox system

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Reference no: EM131346959

Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. It therefore is considering using a lockbox system offered by a bank located in Pittsburgh. The bank has estimated that use of the system will reduce collection time by 2.5 days. Assume 365 days a year.

  Average number of payments per day 740

  Average value of payment $ 690

  Variable lockbox fee (per transaction) $ .20

  Annual interest rate on money market securities 4.5 %

What is the NPV of the new lockbox system? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

  NPV $

Suppose in addition to the variable charge that there is an annual fixed charge of $4,000 to be paid at the end of each year. What is the NPV now? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

  NPV $

Reference no: EM131346959

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