Mountaintop Inns, a Kentucky Company, Has Determined That a Majority

question 1

Multiple Choice

Mountaintop Inns, 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, Pennsylvania.The bank has estimated that use of the system will reduce collection time by one day.In addition to the variable charge shown below, there is also a fixed charge of $4,320 per year for the lockbox system.Assume a year has 365 days.What is the NPV of the lockbox system given the following information?

• A)-$156,727
• B)-$131,301
• C)-$74,208
• D)$11,507
• E)$26,433

---

Definitions:

Marginal Revenue

The revenue uplift experienced by selling an additional unit of a product or service.

Marginal Cost

The additional expense incurred from producing one more unit of a good or service, which is crucial for decision-making in production and pricing.

Tennessee Valley Authority

a U.S. government agency established in 1933 to address a wide range of environmental, economic, and technological issues in the Tennessee Valley region.

Government Owned

Entities or assets that are owned, controlled, or operated by the government or a public authority.