What is the pv of adopting the system


Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time.

It has determined the following:

Average number of payments per day 400
Average value of payment $1,400
Variable lockbox fee (per transaction) $ .75
Daily interest rate on money market securities .02%

The total collection time will be reduced by three days if the lock box system is adopted.

1. What is the PV of adopting the system?

2. What is the NPV of adopting the system?

3. What is the net cash flow per day from adopting ? Per check?

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Microeconomics: What is the pv of adopting the system
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