Question

Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...

Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. Therefore, it 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 days.
  
  Average number of payments per day 720
  Average value of payment $ 670
  Variable lockbox fee (per transaction) $ .15
  Annual interest rate on money market securities 4.3 %
a. 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.)
b.

Suppose in addition to the variable charge that there is an annual fixed charge of $5,000 to be paid at the end of each year. What is the NPV now? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 days.      Average number of payments per day 720   Average value of payment $ 670   Variable lockbox fee (per transaction) $ .15   Annual interest rate on money market securities...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 days. Assume 365 days a year.      Average number of payments per day 720   Average value of payment $ 670   Variable lockbox fee (per transaction) $ .15   Annual interest...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 days.      Average number of payments per day 770   Average value of payment $ 720   Variable lockbox fee (per transaction) $ .20   Annual interest rate on money market securities...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. Therefore, it 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 days.      Average number of payments per day 900   Average value of payment $ 850   Variable lockbox fee (per transaction) $ .20   Annual interest rate on money market securities...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 1.5 days. Assume 365 days a year. Average number of payments per day 890 Average value of payment $ 840 Variable lockbox fee (per transaction) $ .15 Annual interest rate...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 days. Assume 365 days a year. Average number of payments per day 780 Average value of payment $ 730 Variable lockbox fee (per transaction) $ .15 Annual interest rate...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 1.5 days. Assume 365 days a year.      Average number of payments per day 750   Average value of payment $ 700   Variable lockbox fee (per transaction) $ .15   Annual interest...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 1.5 days. Assume 365 days a year. Average number of payments per day 880 Average value of payment $ 830 Variable lockbox fee (per transaction) $ .10 Annual interest rate...
Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are...
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 2.0 days. Assume 365 days a year.      Average number of payments per day 900   Average value of payment $ 850   Variable lockbox fee (per transaction) $ 0.20   Annual interest...
Question 5 (10 marks) Cash Management Bird's Eye Treehouses, Inc., a Kentucky company, has determined that...
Question 5 Cash Management Bird's Eye Treehouses, Inc., a Kentucky company, has determined that a majority of its customers are located in the Pennsylvania area. Therefore, it 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 1.5 days. Average number of payments per day 790 Average value of payment $ 740 Variable lockbox fee (per transaction) $ 0.10 Annual interest rate on...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT