What is the npv of accepting the system

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No More Books Corporation has an agreement with Floyd Bank whereby the bank handles $7.0 million in collections a day and requires a $450,000 compensating balance. No More Books is contemplating canceling the agreement and dividing its eastern region so that two other banks will handle its business. Banks A and B will each handle $3.5 million of collections a day, and each requires a compensating balance of $300,000. No More Books’ financial management expects that collections will be accelerated by one day if the eastern region is divided.

What is the NPV of accepting the system?

NPV       $  

What will be the annual net savings? Assume that the T-bill rate is 2.6 percent annually.

Annual net savings          $   

Reference no: EM13813434

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