Consider the following five different lockbox arrangements:

a. For each arrangement, calculate the benefits from using the lockbox system.

b. Considering the bank fee for each arrangement, which lockbox systems are attractive?

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Arrangement Float Reduction, Opportunity in Days Annual Bank Fee Cost per Year Collections for Lockbox A B C E 3 5543 10% $1,000,000 $500 10% 1,000,000 600 10% 1,000,000 1,500 12% 500,000 500 5% 1,200,000 500