In: Finance
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A mail-order firm processes 4,800 checks per month. Of these, 60 percent are for $38 and 40 percent are for $70. The $38 checks are delayed three days on average; the $70 checks are delayed four days on average. Assume 30 days in a month. |
a-1 | What is the average daily collection float? |
Average daily collection float | $ |
a-2 | How do you interpret your answer? |
On average, there is $ that is (Click to select)collecteduncollected and (Click to select)availablenot available to the firm. |
b-1 |
What is the weighted average delay? (Round your answer to 2 decimal places. (e.g., 32.16)) |
Weighted average delay | days |
b-2 | Calculate the average daily float. |
Average daily float | $ |
c. | How much should the firm be willing to pay to eliminate the float? |
Maximum payment | $ |
d. |
If the interest rate is 7 percent per year, calculate the daily cost of the float. (Use 365 days a year. Do not round intermediate calculations and round your final 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 1.5 days? |
Maximum payment | $ |