Your banker has analyzed your company account and has suggested that her bank has a cash management package for you. She suggests that with a concentration banking system, your float can be reduced by 2 days on average. You, of course, are delighted (you're not sure why), but you do know your average daily collections amount to $400,000. Your opportunity cost of funds is 7 percent. The bank provides this service for $62,000 plus a compensating balance in your current account of $84,500. (A compensating balance is the amount you are required to maintain interest free at that bank.)

a.Is this package worth it?NoYes

b.By how much?(Negative answer should be indicated by a minus sign.)

Annual Saving$

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