Your Firm Has an Average Receipt Size of $60

question 90

Multiple Choice

Your firm has an average receipt size of $60. A bank has approached you concerning a lockbox service that will decrease your total collection time by 1 day. You typically receive 28,000 checks per day. The daily interest rate is 0.016 percent. What is the NPV of the lockbox project if the bank charges a fee of $210 per day?

• A)$367,500
• B)$427,500
• C)$903,350
• D)$1,412,500
• E)$1,680,000

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Definitions:

Maintenance Department

The division within an organization responsible for the upkeep, repair, and servicing of equipment and facilities.

Fixed Costs

Outgoings that remain invariable, regardless of operational output or sales numbers, encompassing costs like rent, employee pay, and safeguarding premiums.

Long-run Average Demand

is the average demand forecasted over a longer period, helping in strategic planning and capacity decisions.

Order Fulfillment Department

A unit within a company responsible for processing customer orders, ensuring products are delivered to customers efficiently and satisfactorily.