A mail-order firm processes 5,900 checks per month. Of these, 60 percent are for $49 and 40 percent are for $81. The $49 checks are delayed two days on average; the $81 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)collecteduncollected 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 7 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 $