A company has a collection of Rs 5,00,000 per day. Mailing and processing delay account for 6 days. If a lock-box system is introduced, delay is reduced to 3 days but the annual cost of the lock-box...

A company has a collection of Rs 5,00,000 per day. Mailing and processing delay account for 6 days. If a lock-box system is introduced, delay is reduced to 3 days but the annual cost of the lock-box system comes to Rs 50,000. Find:

(a) how much cash is released on account of shortening of mailing and processing delay.

(b) what will be annual benefit on account of lock-box system if the released amount is invested at 10% p.a.