Martell-Webb Inc

Martell-Webb Inc.sells to customers all over Canada,and payment cheques come in to its headquarters in Toronto.The firm's average accounts receivable balance is $2.5 million,and they are financed by a bank loan at an 11% annual interest rate.The firm is considering a regional lockbox system to speed up collections,and it believes the lockboxes will reduce receivables by 20%.If the annual cost of the system is $15,000,what would the estimated pre-tax net annual savings be if the firm implements the lockbox system?

A) $500,000
B) $60,000
C) $55,000
D) $40,000