Invention, Inc

question 260

Multiple Choice

Invention, Inc. receives an average of 250 checks a day. The average amount per check is $450. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 3 days. The bank charges $.15 a check for this service. The daily interest rate on Treasury bills is.01 %. What is the net present value of this lockbox arrangement?

• A) -$37,500.00
• B) $506.25
• C) $1,125.00
• D) $112,500.00
• E) $300,000.00

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Definitions:

Population Mean

The average of all the data points in a population, representing the central tendency of the entire population's values.

Sample Mean

The average value of a set of data points taken from a sample of a larger population.

Population Parameter

A numerical value that represents a characteristic or feature of an entire population.

Confidence Coefficient

The probability that a confidence interval contains the true population parameter, typically expressed as a percentage.