A mail-order firm processes 4,300 checks per month. Of these, 60 percent are for $33 and 40 percent are for $65. The $33 checks are delayed two days on average; the $65 checks are delayed three days on average. Assume 30 days in a month.

b-2

Calculate the average daily float.

c.

How much should the firm be willing to pay to eliminate the float?

d.

If the interest rate is 5 percent per year, calculate the 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?