The financial manager of JAC Cosmetics is considering opening a lockbox in Pittsburgh. Checks cleared through the lockbox will amount to $26,000 per day. The lockbox will make cash available to the company three days earlier than is currently the case.

Suppose that the bank offers to run the lockbox for a $39,600 compensating balance, answer the following:

a-1. Calculate the additional available cash generated by the lock-box system.

a-2. Is the lockbox worthwhile?

b. Suppose that the bank offers to run the lockbox for a fee of $0.26 per check cleared instead of a compensating balance. Assume an interest rate of 6% per year. What must the average check size be for the fee alternative to be less costly? Use a 365-day year.

The financial manager of JAC Cosmetics is considering opening a lockbox in Pittsburgh. Checks cleared through the lockbox will amount to $26,000 per day. The lockbox will make cash available to the company three days earlier than is currently the case. Suppose that the bank offers to run the lockbox for a $39,600 compensating balance, answer the following: a-1. Calculate the additional available cash generated by the lock-box system. a-2. Is the lockbox worthwhile? b. Suppose that the bank offers to run the lockbox for a fee of $0.26 per check cleared instead of a compensating balance. Assume interest rate of 6% per year. What must the average check size be for the fee alternative to be less costly? Use a 365 -day year. Complete this question by entering your answers in the tabs below. Calculate the additional available cash generated by the lock-box system