5. Nice Furniture Ltd is currently following a centralized collection system. Most of its customers are located in the cities of Northern India. The remittances mailed by customers to the central location take three days to reach. Before depositing the remittances in the bank, the firm looses two days in processing them. The daily average collection of the firm is 12 lakh. The company is thinking of establishing a lock-box system. It is expected that such a system will reduce mailing time by one day and processing time by one day. (i) Find out the reduction in cash balances expected to result from the adoption of the lock-box system. (ii) Determine the opportunity cost of the present centralized collection system if the interest rate is assumed to be 15 per cent. (iii) Should the lock-box system be established if its annual cost is $24,500?