1. Lincoln Medical Clinic Writes $4,000 in checks. Generally, those checks take four days to clear. Each day the clinic typically received. $2,000 in checks, which take three days to clear. What is the clinics float?

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2. 2. Express Drugs RX operates a Mail order pharmaceutical business in New Jersey the firm receives an average of $325,000 in payments per day on average it takes 4 days from the time customers mail their checks until the firm receives them. The company is considering establishing a lock box system, in which customers payments would be sent to nearby banks local in terms of the purchasers instead of directly to New Jersey banks in the lock box locations would then wire the daily receipts to a single (concentration) bank.

The lock box system which would consist of 10 local depository banks and a concentration bank would cost Express Drugs RX a total of $8,500 per month under the system customers checks would be received at the tent lock box locations one day after they are mailed and the daily total from each of the 10 lockboxes locations would be wired to the concentration bank at a cost of $11.75 per transfer

Assume the firm could earn 10% on short-term investments further assume 260 working days and hence 260 transfer from each lock box location per year.

1. What is the total annual cost of operating the lockbox system?

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2. What is the dollar benefit of the system to Express Drugs RX?

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3. Should the firm initiate the lockbox system?

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