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A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for $47 and 30 percent are for $79. The $47 checks are

A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for $47 and 30 percent are for $79. The $47 checks are delayed two days on average; the $79 checks are delayed three days on average. Assume 30 days in a month.

1 What is the average daily collection float? (Do not round intermediate calculations.)
a) Average daily collection float $

2 How do you interpret your answer? (Do not round intermediate calculations.)

a) On average, there is $ ________

3) What is the weighted average delay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

A)

Weighted average delay __________ days

4) Calculate the average daily float. (Do not round intermediate calculations.)

Average daily float_________ $

5) How much should the firm be willing to pay to eliminate the float? (Do not round intermediate calculations.)

Maximum payment $

6) 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.)

Daily cost of the float $

7) How much should the firm be willing to pay to reduce the weighted average float to 2 days? (Do not round intermediate calculations.)

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