Djorkaeff Corporation's cash inflows average $310,000/day. Its bank has offered to implement a lock box/concentration banking system that would cut receivables float from 5 days to 2 days for an annual fee of $175,000. Djorkaeff has a 12% cost of capital and is in the 30% tax bracket.

What is the internal rate of return (IRR) of the proposed system?

13.17%

7.90%.

19.76%.

39.52%.