Final answer:
The present value of adopting a lockbox system is determined by the accelerated cash flows, which for Paper Submarine Manufacturing is $1,102,725 over a three-day period. The daily net cash flow from the lockbox system is $684.76 after accounting for interest gains and transaction fees. The net cash flow per check is $1.57. Calculating the net present value (NPV) requires additional information on the time horizon and total number of transactions.
Step-by-step explanation:
To calculate the present value (PV) of adopting the lockbox system, we need to determine the savings brought by accelerating the cash flows by three days. Since the average number of payments per day is 435 and the average value of a payment is $845, the total value of daily payments is $367,575 (435 payments/day * $845/payment). With a three-day reduction in collection time, the lockbox system yields $1,102,725 in accelerated cash flows (3 days * $367,575/day).
The daily interest rate on money market securities is 0.068%, resulting in a three-day interest gain of $750.26 (0.068% * 3 days * $367,575). The variable lockbox fee per transaction amounts to $65.25 (435 payments/day * $0.15/transaction). Thus, the net cash flow from adopting the lockbox system per day is $684.76 ($750.26 - $65.25), and per check, it is $1.57 ($684.76 / 435 payments/day).
To calculate the NPV, we must discount the future savings back to the present value. However, without knowing the time horizon or the total number of transactions over which these savings would be realized, the NPV cannot be accurately calculated.