A mail-order firm processes 6,300 checks per month. Of these, 70 percent are for $53 and 30 percent are for $85. The $53 checks are delayed two days on average; the $85 checks are delayed three 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) ▪ and (Click to select) 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 fim be willing to pay to eliminate the float? Maximum payment 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 final answer to 2 decimal places. (e.g., 32.16)) Daily cost of the float e. How much should the fim be willing to pay to reduce the weighted average float to 2.0 days? Maximum payment
A mail-order firm processes 6,300 checks per month. Of these, 70 percent are for $53 and 30 percent are for $85. The $53 checks are delayed two days on average; the $85 checks are delayed three 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) ▪ and (Click to select) 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 fim be willing to pay to eliminate the float? Maximum payment 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 final answer to 2 decimal places. (e.g., 32.16)) Daily cost of the float e. How much should the fim be willing to pay to reduce the weighted average float to 2.0 days? Maximum payment
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:A mail-order firm processes 6,300 checks per month. Of these, 70 percent are for $53 and 30 percent are
for $85. The $53 checks are delayed two days on average; the $85 checks are delayed three 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) ▪ and (Click to select)
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 fim be willing to pay to eliminate the float?
Maximum payment
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 final answer to 2 decimal places. (e.g.,
32.16))
Daily cost of the float
e. How much should the fim be willing to pay to reduce the weighted average float to 2.0 days?
Maximum payment
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