How much would it be willing to spend each year to reduce

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Reference no: EM13334386

Clearwater Glass Company examined its cash management policy and found that it takes an average of five days for checks that the company writes to reach its bank and thus to be deducted from its checking account balance. On the other hand, an average of four days elapses from the time Clearwater Glass receives payments from its customers until the funds are available for use at its bank.
On the average day clearwater glass writes checks that total 70,000 and it recieves checks from customers that total 80,000.

(a) Compute the disbursement float, collection float, and net floats in dollars.

(b) If clearwater glass has an opportunity cost equal to 10%, how much would it be willing to spend each year to reduce collections delay "float" by two days?

Reference no: EM13334386

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