Question

A mail-order firm processes 5,800 checks per month. Of these, 70 percent are for $48 and 30 percent are for $80. The $48 checks are delayed three days on average; the $80 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 intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b-2. Calculate the average daily float. (Do not round intermediate calculations.) c. How much should the firm be willing to pay to eliminate the float? (Do not round intermediate calculations.) d. If the interest rate is 5 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.) e. How much should the firm be willing to pay to reduce the weighted average float to 1.5 days? (Do not round intermediate calculations.)

Answer 1