A mail-order firm processes 4300 checks per month of these, Ask an Expert

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A mail-order firm processes 4,300 checks per month. Of these, 60 percent are for $33 and 40 percent are for $65. The $33 checks are delayed two days on average; the $65 checks are delayed three days on average. Assume 30 days in a month.

a. Calculate the average daily float.

b. How much should the firm be willing to pay to eliminate the float?

c. If the interest rate is 5 percent per year, calculate the daily cost of the float.

d. How much should the firm be willing to pay to reduce the weighted average float to 1.5 days?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92087072

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