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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
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 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 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.) |
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.) |
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