by establishing five reglonal collection bank accounts at its San Francisco, Denver, Dallas, Philadelphia, and Atlanta branches. These regional branch accounts were selected to reduce the mail time required to return the funds to Hartford. Two altematives are ovalfable for moving funds from the five concentrabion accounks to the master collection accounti a mall transfer or a wire transfer. Under the wire-based proposal, the mal time from the customer to the regional concentration banks will be reduced to three days, the paymentprocessing time is reduced to one day, and the check-clearing delay is reduced to three days. Each regionat concentration bank will then wire the coliected funds to the master concentration account in Kansas City. Funds will be available immediately after their receipt from the concentration bank The proposed system wir cost $900 per month plus $0.10 per payment and will require a compensating balance of $50,000 in each of the six. branches of the bank, Strongbox will also charge 520 per wire transfer and expects to remit the collected funds to Kansas City every other day Should Premiums Abound Insurance Company (PAIC) invest in the proposed system? Why or why not? No, because the differential net benefit, calculated as the net benefit of the proposed system minus the net benefit of the current system, is negative, Yes, because the differential net benefit, caiculated as the net benefit of the proposed system minus the net benefit of the current system, is negative. No, becouse the differential net benefit, calculated as the net benefit of the proposed system minus the net benefit of the current system, is greater than or equal to zero. Yes, because the differential net benefit, calculated as the net benefit of the proposed system minus the net benefit of the current system, is greater than or equal to zero. Review the information about this case: Under Premiums Abound Insurence Company (PAIC)'s current centralized collection system, all policyholders send their monthly, quarterly, or annual premiums to its Hartford, Connecticut, office. It takes an average of seven days for the premium checks to be received at the Hartford office and another four days to be processed by the company's Premium Processing Department. Once the checks are deposited in the company's bank in Hartford, it takes an average of eight days for thy in-state and out-of-state checics to be cleared and made available to parc. On average, the company recelves per year 300,000 premium payments, which total $325,000,000 in annual premiums. The Hartford bank, which does not require a compensating balance, charges a monthly fee of $1,400 and 50.15 per payment. The Strungbox Banking Group, o bank based in Kansas City, Missouri, is offering to create and operate a decentralized collection aystern tor PAtC Under the wire-based proposal, the mail time from the customer to the regional concentration banks will be reduced to three days, the paymentprocessing time is reduced to one day, and the check-clearing delay is reduced to three days. Each regional eoncentration bank wilt then wire the collected funds to the master concentration account in Kansas City. Funds will be available immediately after their receipt from the concentration bank. The proposed system will cost $900 per month plus 50,10 per payment and will require a compensating balance of $50,000 in each of the six branches of the banki strongbox will also charge 520 per wire transfer and expects to remit the collected funds to Kansas City every other day (approximately 182 bmes per vear). Amy funds released the decentralized system will be invested in marketable securicies to vield 15,00% before taxes. The Premlums Abound Insurance Company (PAIC), a Connecticut-based insurer conducting business in all 50 states, currently uses a centralized collection system that requires all policyholders to send their monthly, quarterfy, or annual premiums to PArC's ofrice in Hartford, Connecticut. Under the current system, it takes an average of seven days for PAIC's premium checks to be recelved at the Hartford office and another four days to be processed by PAIC's Premium Processing Department. Once the checks are deposited in the Hartford bank, it takes an average of eight days for the in-state and out-of-state checks to be cleared and made avalable to PAIC. On average, PAIC recelves per year 300,000 premium paryments, which totar $325,000,000 in annual premiums. The Hartlord bank, which does not require a compensationg balanke, charges a monthly fee of $1,400 and $0,15 per payment. Complete the following table for PAic's current centralized system: The Strongbox Banking Group, a bank bosed in Kansas City, Missoun, is offering to create and operate a decientralized collection system for PAtC by establishing five tegional collection bank accounts at its San Francisco, Denver, Dallas, Phiadelphia, and Atianta branches- Notice thet these regionat branch sccounts, which are located across the country in cities with Federal Reserve Banks, were selected to reduce the mail time required to return. the funds to Hartford. These locotions also create two alternatives for the movement of collected funds from the five concentration accounts to the master collection account: either by mailing a check or by wiring the funds to the Kansas city account. Under Strongbox's wre-based proposal, the mail tume from the customer to the regional concentration banks wil be reduced to three days, and since the parments will be sent directly to the banks, the poyment-processing time is reduced to one day. Each week, each cancentration bank will send a list of customer names, policy numbers, and payment amounts to PAIC's hartford office to be posted separately from the payments to the cuatomers" accounts. Since the parments are cleared relatwely locally, through the regonal concentration banks, the check-clearing delay is reduced to three days. Each regional concentration bank will then wire the collected funds to the master concentration account at strongboxis Kansas City branch: these funds wil be available to PAIC immediately after their receipe from the concentration bank. Strongbox has offered to operate this system for $900 per month plus $0.10 per payment and a comptensating balance of $50,000 in each of the six Strongbox branches. It will also charge $20 per wire transfer and expects to remit the collected funds to Kansas city every other day (approximately 182 times per year). Funds kept on deposit as compensating balances cannot be invested in marketable securities, and should any funds be released by the decentralized system, they will be invested in marketable securities to yield 15.00% before taxes. Complete the following table for the proposed decentralized system: Using the previous information, complete the table that follows and determine whether PAic should change to the decentralized collection syitem. (Note: Assume a 365 -day year in your calculations and round your final answers to the nearest dolise.)