A firm can convert from a paper-based system to an ACH system for a cost of $20,000. There would, however, be a savings of $0.95 on each check and the company expects 2,500 disbursements for the year. The firm's opportunity cost is 8%. Assuming the company will be operating for the forseeable future, what is the project's NPV?
$15,125
$12,439
$9,687
$4,025
The Williams Company can convert to ACH disbursing for $20,000. Williams is expected to average a perpetual 5,000 checks per year. ACH disbursing will save Williams $0.20 per payment. Using a discount rate of 10%, what is the minimum number of annual payments required to justify the cost to convert to ACH disbursing?
A discounted money market security has just been issued. It has a 6 month maturity (180 days), a face value of $20,000 and a discount rate of 3%. What is its money market yield?