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Thank you in advance for your work! 4. Another firm has expanded its sales territory outside of its headquarter city. Most customers pay by check,

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4. Another firm has expanded its sales territory outside of its headquarter city. Most customers pay by check, and the 6 days, on average, it is taking to collect payments from the firm's geographically dispersed customers has become an issue. The firm is considering a lockbox system and has sent a RFP to three banks. Each bank offers different performance levels and a different cost structure. Mail float has been determined based on postmark city and date. Processing float is estimated by the bank. Availability float is based on the bank's routing transit number and availability schedule. A. Conduct a lockbox study to determine which bank to select and why. TC= cwP ={N"[D(365) + vc]}+FC Lockbox Analysis Bank 1 Bank 2 Bank 3 1,100 1,750 $ 1,925,000 1,100 1,750 $ 1,925,000 Monthly Assumptions Average # of remittances (N) Average Face Value of Remittances (F) $ Total Monthly Remittances Mail Float Processing Float Availability Float Total Float 1,100 1,750 1,925,000 1.4 0.4 2.2 1.7 0.5 1.2 1.3 0.9 0.9 Variable Costs (VC) Fixed Costs (FC) $ $ 1.25 $ 500 $ 1.00 $ 1,000 $ 1.10 625 Opportunity Costi 12% 12% 12% Total Costs B. Redo the analysis if the firm had the same total monthly remittances but it had a large volume of small dollar remittances. No other variables change. Does it change the bank the firm would select? Why? Lockbox Analysis Bank 1 Bank 2 Bank 3 10,000 193 $ 1,925,000 10,000 10,000 193 $ 193 1,925,000 1,925,000 Monthly Assumptions Average # of remittances (N) Average Face Value of Remittances (F) $ Total Monthly Remittances Mail Float Processing Float Availability Float Total Float 1.7 1.3 1.4 0.5 0.9 0.4 2.2 1.2 0.9 Variable Costs (VC) Fixed Costs (FC) $ $ $ 1.25 $ 500 $ 1.00 $ 1,000 $ 1.10 625 Opportunity Costi 12% 12% 12% Total Costs

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