Cookie Cutters Corporation has an agreement with Floyd Bank whereby the bank handles $4.6 million in collections a day and requires a $330,000 compensating balance. Cookie Cutters 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 $2.3 million of collections a day, and each requires a compensating balance of $180,000. Cookie Cutters' financial management expects that collections will be accelerated by one day if the eastern region is divided.
(Show work. Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)
What is the NPV of accepting the system?
Assume that the T-bill rate is 2.5 percent annually. What will be the annual net savings?