No More Books Corporation has an agreement with Floyd whereby the bank handles $3.2 million in collections a day and requires a $260000 compensating balance.
No More Books is contemplating cancelling the agreement and dividing its eastern region so that two other banks will handle its business. Banks A and B will
each handle $1.6 million of collections a day and each requires a compensating balance of $110000. No More Books financial management expects that
collections will be accelerated by one day if the eastern region is divided.
1. What is the NPV of accepting the system?
2. What will be the annual net savings? Assume that the T-bill rate is 2.6 percent annually.
Annual net savings=$
Please show complete work with answers clearly marked. NPV= $ and Annual net savings= $