Question 5 (10 marks) Cash Management Anne Teak, the financial manager of a furniture manufacturer, is considering operating a lockbox system. She forecasts that 350 payments a day will be made to lockboxes with an average payment size of $2,000. The banks charge for operating the lockboxes is $0.45 a check. Assume an interest rate of 9% and a 365-day year. Required (Do not round intermediate calculations. Round your answer to 2 decimal places.)

a) Anne Teak further estimates that the lockbox system can reduce the average mail time by 1 day and can save a combined clearing and processing time of 0.5 days by putting the checks into the clearing system sooner. The firm receives 320 checks a day on with an average value of $2,500 each. What is the annual amount of income the bank can earn if it installs this service?