Problem:

Your firm has an average receipt size of $130. A bank has approached you concerning a lockbox service that will decrease your total collection time by two days. You typically receive 6,900 checks per day. The daily interest rate is 0.018 percent. The bank charges a lockbox fee of $165 per day.

Required:

Question: What would the net annual savings be if the service were adopted? Use 365 days a year. Do not round intermediate calculations and round your final answer to 2 decimal places.

Note: Provide support for your rationale.