Question

Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She

forecasts that 400 payments a day will be made to lock boxes with an average payment size of $3,000. The bank’s charge for operating the lock boxes is $.50 a check. The interest rate is .012% per day.

a-1.If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)

  Daily interest saved$   88

a-2.Is it worthwhile to adopt the system?   Yes

b.What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

I NEED help with b please

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