Prime Bank is offering your company the use of their lockbox services. They estimate that you can reduce your average mail time by 1.5 days and they can save you a combined clearing and processing time of 1 day by putting the checks into the clearing system sooner. Your firm receives 198 checks a day with an average value of $2,300 each. The current T-Bill rate is .011 per day. Assume a 365-day year. Prime Bank will charge your firm an annual fee of $27,500 plus $.20 per check. What is the annual net savings from installing this system?

$4,115.36

$3,480.00

$2,816.00

$3,756.78

$4,108.29