Annual collections from the New England region are $292 million. The total number of payments received annually is 600,000 (an average of 50,000 credit card holders 

12 payments per year). Assume that any funds released by this lockbox arrangement can be invested by Builders Circle to earn 10 percent per year before taxes.

The establishment of a lockbox system for the New England region will reduce payment processing costs at its Atlanta headquarters by $40,000 per year. Using this information, determine

a. The amount of funds released by this lockbox arrangement

b. The annual (pretax) earnings on the released funds

c. The annual fee that Builders Circle must pay the Boston bank for processing the payments

d. The annual net (pretax) benefits Builders Circle will receive by establishing this lockbox arrangement with the Boston bank: : LO1