On average, a firm collects checks totaling $250,000 per day. It takes the firm approximately 4...

On average, a firm collects checks totaling $250,000 per day. It takes the firm approximately 4 days from the day the checks were mailed until they result in usable cash for the firm. Assume that (1) a lockbox system could be employed which would reduce the cash conversion procedure to 2 1/2 days and (2) the firm could invest any additional cash generated at 6% after taxes. The lockbox system would be a good buy if it costs $25,000 annually.

a. True

b. False

Expert Solution

jeff jeffy answered 8 months ago

Jumpdisk Company writes checks averaging $32,000 a day and it takes five days for these checks...

Jumpdisk Company writes checks averaging $32,000 a day and it takes five days for these checks to clear. The firm also receives checks in the amount of $35,000 per day, but the firm loses four days while its receipts are being deposited and cleared. What is the firm's net float in dollars?

Madison Corner writes 26 checks a day for an average amount of $481 each. These checks...

Madison Corner writes 26 checks a day for an average amount of $481 each. These checks generally clear the bank 3.75 days after they are written. In addition, the firm generally receives 63 checks with an average amount of $538 each. Deposited amounts are available after an average of 3.25 days. What is the amount of the firm's collection float? a)$12506 b)$33894 c) $63,258 d) $110156

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Shannara Manufacturing writes 40 checks a day for an average amount of $537 each that generally clear 3.75 days after they are written. In addition, the firm generally receives 48 checks each day with an average amount of $622 each that are available after 3.25 days. Is this a collection or disbursement float? What is the amount of the float?

your firm receives three checks that have a two and a half-day collection delay. each check...

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A mail-order firm processes 5,000 checks per month. Of these, 70 percent are for $40 and...

A mail-order firm processes 5,000 checks per month. Of these, 70 percent are for $40 and 30 percent are for $72. The $40 checks are delayed three days on average; the $72 checks are delayed four days on average. Assume 30 days in a month. a-1. What is the average daily collection float? (Do not round intermediate calculations.) a-2. How do you interpret your answer? (Do not round intermediate calculations.) b-1. What is the weighted average delay? (Do not round...

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