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 $2,000. The bank's charge for operating the lock boxes is $.40 a check. The interest rate is .015% per day.

a-1. If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system.

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

b. What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system?