Builders Circle, a hardware and building supplies company, processes all its customer credit card payments at its Atlanta headquarters. A Boston bank has offered to process the payments from Builders Circle customers located in the New England region for $50,000 per year plus $0.20 per payment. No compensating balance will be required. Under this lockbox arrangement, the average mailing time for payments would be reduced from 3 days to 1.5 days. Check processing and clearing time would be reduced from 5 days to 2. Annual collections from the New England region are $292 million. The total number of payments received annually is 600,000 (an average of $50,000 credit card holders x 12 payments per year). Assume that any funds released by this lock arrangement can be invested by Builders Circle to earn 10 percent per year before taxes. The establishment of a lockbox system for the New England region will reduce payment processing costs at its Atlanta headquarters by $40,000 per year. Using this information, determine

a. The amount of funds released by this lockbox arrangement.

b. The annual (pretax) earnings on the release funds.

c. The annual fee that Builders Circle mus pay the Boston bank for processing the payments.

d. The annual net (pretax) benefits Builders Circle will receive by establishing this lockbox arrangement with the Boston bank.