Reference no: EM131347198
A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for $47 and 30 percent are for $79. The $47 checks are delayed two days on average; the $79 checks are delayed three days on average. Assume 30 days in a month.
a-1 What is the average daily collection float? (Do not round intermediate calculations.)
Average daily collection float $
b-1 What is the weighted average delay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Weighted average delay days
b-2 Calculate the average daily float. (Do not round intermediate calculations.)
Average daily float $
c. How much should the firm be willing to pay to eliminate the float? (Do not round intermediate calculations.)
Maximum payment $
d. If the interest rate is 6 percent per year, calculate the daily cost of the float. (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Daily cost of the float $
e. How much should the firm be willing to pay to reduce the weighted average float to 2 days? (Do not round intermediate calculations.)
Maximum payment $
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