Smith Corp. is establishing a lock-box system to reduce its float. The firm anticipates saving 2 days of mail time and 0.50 days of processing time through the system. It expects 500 payments to be collected daily, at an average size of $350. The appropriate interest rate is 5 percent per year. If banks charge $0.15 per payment, should the firm set up the lock box system?

a. Firm should set up lock box system because the savings are $59.93

b. Firm should not set up lock box system because savings are -$15.07

c. Firm should not set up lock box system because the cost is $25

d. Firm should set up lock box system because the saving are $15.07