Paper Submarine Manufacturing is investigating a lockbox system to reduce its co
ID: 2786059 • Letter: P
Question
Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following:
What is the NPV of adopting the system? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
What is the net cash flow per day from adopting the lockbox system? Per check? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Paper Submarine Manufacturing is investigating a lockbox system to reduce its collection time. It has determined the following:
Explanation / Answer
PV = reduced days * number of payments * average payment value
= 4 * 410 * 1000
= 1640000
NPV = PV - (locker fee * number of payments) / rate
= PV - (0.4 * 410) / 0.068% = 1640000 - 241176.5
= 1398824
Net cashflow = PV * rate - locker fee * number of payments
= 1640000*0.068% - 0.4 * 410
= 951.2 $ per day
Net cashflow = Per day / number of payments
= 951.2 / 410
= 2.32 $ per check
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