20.6 The benefit of the lock-box system, and the price the firm should be willing to pay for the system, is higher when:

a. Payment size is higher (since interest is earned on more funds).

b. Payments per day are higher (since interest is earned on more funds).

c. The interest rate is higher (since the cost of float is higher).

d. Mail time saved is higher (since more float is saved).

e. Processing time saved is higher (since more float is saved).