Assuming Bulls Company Incorporated, a Tampa based company, has five local bank branches in NY, Houston, Pittsburg, Los Angeles and Cleveland as stated in Exhibit #4. Each of these branches has their own bank accounts that are separately managed by each of their branch offices. Customers checks are processed & cashed by these various locations by their branch staff. A new Treasurer, Dr. Paul, decides to implement a lock-box account with Chase bank and concentrate all the Companys cash receipts to only one bank in Tampa Bank of Tampa.

Given the following information:

i. Bulls Company cost of capital = 10%

ii. The Lock-box will reduce the time of processing check receipts and making the cash available to the Chase Bank account by 3-days

iii. Implementation of Lock-box will reduce Bulls Company headcount by 2 employees

iv. Average annual salary of one Bulls employee = $65,000

v. Annual cost of Lock-box and bank fees charged by Chase Bank = $150,000 per year

vi. Bulls Company annual sales = $700,000,000

Calculate:

a. The float savings from the lock-box by reducing check processing by 3-days

b. The float value of all the cash balances in the five bank accounts

c. The bank fees savings from closing all the branch bank accounts

d. The total savings of implementing the lock box

e. Can you list at least two methods of preventing bank fraud?