Reference no: EM132487504

A mail-order firm processes 4,400 checks per month. Of these, 70 percent are for $34 and 30 percent are for $66. The $34 checks are delayed three days on average; the $66 checks are delayed four days on average. Assume 30 days per month.

Question a-1 What is the average daily collection float? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Question a-2 How do you interpret your answer?

Question b-1 What is the weighted average delay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 3216.)

Question b-2 Calculate the average daily float. (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Question c. How much should the firm be willing to pay to eliminate the float? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

Question 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.)

Question e. How much should the firm be willing to pay to reduce the weighted average float by 1.5 days? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)