Problem:
Your firm has an average receipt size of $108. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 8,500 checks per day. The daily interest is .016 percent.
Required:
Quesiton: If the bank charges a fee of $225 per day, should the lockbox project be accepted? What would be the net annual savings be if the service were adopted?
Note: Provide support for rationale.