Richmond Corporation was founded $20$ years ago by its president, Daniel Richmond. The company originally began as a mail$-$order company but has grown rapidly in recent years, in large part due to its website. Because of the wide geographical dispersion of the company$$s customers, it currently employs a lockbox system with collection centers in San Francisco, St$.$ Louis, Atlanta, and Boston. Steve Dennis, the company$$s treasurer, has been examining the current cash collection policies. On average, each lockbox center handles $$185,000$ in payments each day. The com pany$$s current policy is to invest these payments in short$-$term marketable securities daily at the collection center banks. Every two weeks the investment accounts are swept and the proceeds are wire$-$transferred to Richmond$$s headquarters in Dallas to meet the company$$s payroll. The investment accounts each pay $\mathrm{.}068$ percent per day and the wire transfers cost $\mathrm{.}20$ percent of the amount transferred. Steve has been approached by Third National Bank, located just outside Dallas, about the possibility of setting up a concentration banking system for Richmond Corp. Third National will accept the lockbox centers$$ daily payments via automated clearinghouse $($ACH$)$ transfers in lieu of wire transfers. The ACH$-$transferred funds will not be available for use for one day. Once cleared, the funds will be deposited in a short$-$term account, which will yield $\mathrm{.}075$ percent per day. Each ACH transfer will cost $$200.$ Daniel has asked Steve to determine which cash management system will be the best for the company. Steve has asked you, his assistant, to answer the following questions:

$1.$ What is Richmond Corporation$$s total net cash flow from the current lockbox system that is available to meet payroll?

$2.$ Under the terms outlined by Third National Bank, should the company proceed with the concentration banking system?

$3.$ What cost of ACH transfers would make the company indifferent between the two systems?