North Woods Auto Supply Is Considering Implementing a Lockbox System

question 163

Multiple Choice

North Woods Auto Supply is considering implementing a lockbox system. The system is expected to reduce the collection time by 2.5 days. On an average day, North Woods receives 1,045 cheques
With an average value of $1,180 each. The daily interest rate on Treasury bills is .011 percent. The
Bank charge per cheque would be $.25. What is the net present value of this lockbox arrangement?

• A) $525,806
• B) $647,500
• C) $707,750
• D) $768,009
• E) $782,001