A mail-order firm processes 5,800 checks per month. Of these, 70 percent are for $48 and 30 percent are for $80. The $48 checks are delayed three days on average; the $80 checks are delayed four days on average. Assume 30 days in a month.
a-1 What is the average daily collection float? (Do not round intermediate calculations.) Average daily collection float $
a-2 How do you interpret your answer? (Do not round intermediate calculations.) On average, there is $ that is and to the firm.
b-1 What is the weighted average delay? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Weighted average delay days
b-2 Calculate the average daily float. (Do not round intermediate calculations.) Average daily float $
c. How much should the firm be willing to pay to eliminate the float? (Do not round intermediate calculations.) Maximum payment $
d. If the interest rate is 5 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 $
e. How much should the firm be willing to pay to reduce the weighted average float to 1.5 days? (Do not round intermediate calculations.) Maximum payment $