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Business, 30.03.2021 18:20 solisemily62

No More Books Corporation has an agreement with Floyd Bank, whereby the bank handles $2.7 million in collections a day and requires a $425,000 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 each will handle $1.35 million of collections a day and each requires a compensating balance of $230,000. No More Books’ financial management expects that collections will be accelerated by one day if the Eastern region is divided. Required:
a. What is the NPV of accepting the system?
b. What will be the annual net savings?
c.

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