Corporation has an agreement with Citi Bank, whereby the bank handles $3.5 million in collections a day and requires a $500,000 compensating balance. Corporation is contemplating canceling the agreement and dividing its Eastern region so that two other banks will handle its business. Banks Alfa and Beta each will handle $1.75 million of collections a day and each requires a compensating balance of $265,500. Corporation's financial management expects that collections will be accelerated by one day if the Eastern region is divided. 1. Should the company proceed with the new system? 2. What will be the annual net savings? 3. Assume that the T-bill rate is 3.5 percent annually.

Shows all the step and formula. Don't round off until you get the answer.