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A mail-order firm processes 5,200 checks per month. Of these, 70 percent are for $42 and 30 percent are for $74. The $42 checks are

A mail-order firm processes 5,200 checks per month. Of these, 70 percent are for $42 and 30 percent are for $74. The $42 checks are delayed three days on average; the $74 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)uncollectedcollected and (Click to select)not availableavailable 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 5 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 $

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