Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lock-box system. She forecasts that 700 payments a day will be made to lock boxes with an average payment size of $3,500. The banks charge for operating the lock boxes is $.50 a check. The interest rate is .011% per day.

a-1.	If the lock box makes the cash available 2 days earlier, calculate the net daily advantage of the system. (Do not round intermediate calculations.)

Daily interest saved

$

a-2.	Is it worthwhile to adopt the system?
	Yes No

b.	What minimum reduction in the time to collect and process each check is needed to justify use of the lock-box system? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Minimum reduction in time

days