TC for the cash collection system using a lockbox system or handling collection through used of the banks The model is: TC = (N (F (D) (1/365) + VC)) =+FC The variables are: Ne number of remittances or payments processed 1,500 F-face value of the average remittance or customer payment $2,000 D-Number of days it takes to clear the check (collection float time) 8 days for the company or 6 days for lockbox 1 = opportunity cost or interest rate applied to the analysis that can be earned elsewhere by the company is 9% VC= variable cost of each remittance .30 for the company or .20 for the lockbox arrangement FC-fixed cost of operating the collection system $700 for the company or $300 for the lockbox remittance system The problem assumes the bank because of economies of scale is cheaper. Show all of your math work: Part A. Total Cost Using the Bank without a lockbox system = Part B. The Total cost of company processing payments with a lockbox system- Part C: the difference between Part A and Part B and Decision: C1: $ Difference between the collection arrangements: C2: Decision: given C1: