Please help me how did the answer became like that? Can someone show the solution/formula? Thank you

Problem 4: BB Co. has received proposals from several banks to establish a lockbox system to speed up receipts. BB receives an average of 700 checks per day averaging P1,800 each, and its cost of short term funds is 7% per year. Assuming that all proposals will produce equivalent processing results and using a 360-day year, which one of the following proposals is optimal for BB?

A. A P0.50 fee per check?

B. A fee of 0.03% of the amount collected.

C. A flat fee of P125,000 per year

D. A compensating balance of P1,750,000

ANSWER: D

D. A compensating balance of $1,750,000