Your firm has an average receipt size of 125 a bank has, Ask an Expert

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Your firm has an average receipt size of $125. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 7,000 checks per day. The daily interest rate is .016 percent. The bank charges a lockbox fee of $175 per day. What is the NPV of accepting the lockbox agreement? What would the net annual savings be if the service were adopted?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91813349

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