Murkywater Company is considering a lockbox system. Its collection delay is currently 12 days.

• Reduction in mailing time = 1.5 day
• Reduction in clearing time = 1.5 day
• Reduction in firm processing time = 1.0 day
• Total = 4.0 days

The following is also known:

• Daily interest on Treasury bills = 0.025%
• Average number of daily payments to lockboxes = 4,000
• Average size of payment = $400

A local bank has agreed to operate this lockbox system for a fee of $0.25 per check processed.

What are Murkywaters average daily collections?

MULTIPLE CHOICE

• $1,000,000

• $1,200,000

• $1,400,000

• $1,600,000

• $1,800,000