Dockery Enterprises receives an average of 340 cheques a day. The average amount per cheque is $4,500. The firm is considering a lockbox system which it anticipates will reduce the average collection time by 3 days. The bank charges $.75 a cheque for this service. The daily interest rate on Treasury bills is.0125 %. What is the net present value of this lockbox arrangement?
A) $1,534,000
B) $1,750,000
C) $2,165,000
D) $2,550,000
E) $3,075,000
Correct Answer:
Verified
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