Business, 01.04.2020 20:44 ScuddyG7164

Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following:

(1) The average number of payments per day is 360

(2) Average value of the payment is $950

(3) Variable lockbox fee (per transaction) is $0.35

(4) The daily interest rate on money market securities is 0.068%

The total collection time will be reduced by four days if the lockbox system is adopted.

Answer the following:

a. What is the PV of adopting the system? (Do not round intermediate calculations and round the final answer to the nearest whole dollar amount, e. g. 32).

b. What is the NPV of adopting the system? (Do not round intermediate calculations and round the final answer to the nearest whole dollar amount, e. g. 32).

c. What will be the net cash flow per day by adopting the system? Also, what will be the net cash flow per check? (Do not round intermediate calculations and round the answers to 2 decimal places, e. g. 32.16).

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