I have seen many different solutions to this question here on Chegg, so I have become very confused on how the problem is actually supposed to be solved. Where do the differences come from? Are there different theories $/$ accepted practices to solve such a problem in Corporate Finance? Lemon Brothers, a large Lemon distributor in the U$.$S$.,$ is selling $50,000$ tons per year on credit at an average selling price of $$1000$ per ton. The average customer payment is for purchasing $0\mathrm{.}055-$ ton lemons per customer. Treasury bills are currently yielding $5$ percent per year. The current credit term of Policy $1$ is net $30($no cash discount$)$ and the customers, on average, pay $4$ days overdue. The company is considering offering an alternative credit term of $2/10,$ net $30($Policy $2)$ and anticipates that $20$ percent of its customer will take advantage of the discounts. Policy $2$ will reduce the collection period to $28$ days, assuming $365$ days a year. Alternatively, the company can use a short$-$term financing from Silicon Bank charging an annual interest rate of $40$ percent on the short$-$term loans. The company is factoring all receivables immediately at a $2$ percent discount. It is also considering opening a lockbox perpetually in Silicon Bank that provides this service for an annual fee of $$25,000$ plus $10$ cents per check cleared for each purchase. The lockbox will make cash available to the company one day earlier than the current case. Requirements:

a$)$ What are the average receivables under Policy $1$ and Policy $2?$

b$)$ Under Policy $1,$ what is the effective annual cost of factoring assuming that default is extremely unlikely.

c$)$ Under Policy $2,$ what is the average collection period for those customers who do not take the discount?

d$)$ Under Policy $2,$ what is the implied interest charged on the payment of an average customer paid within $30$ days?

e$)$ Should the company adopt Policy $2$ or use the short$-$term financing provided by Silicon Bank?

f$)$ How many customer purchases are needed each day to make the lockbox service affordable for the company?