A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for

Question

A mail-order firm processes 5,700 checks per month. Of these, 70 percent are for $47 and 30 percent are for $79. The $47 checks are delayed two days on average; the $79 checks are delayed three days on average. Assume 30 days in a month.

ANSWER IS 26011

On average, there is $

that is Uncollected and not available to the firm

What is the weighted average delay? (Round your answer to 2 decimal places. (e.g., 32.16))

ANSWER IS NOT 2.3 DAYS

Calculate the average daily float.

ANSWER IS NOT 24734.20

ANSWER IS NOT 1365.80

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))

ANSWER IS NOT 1366.028

ANSWER IS NOT 4592

Explanation / Answer

A1) avg daily float= total float/no of days in month
=(47*70%*5300)+(79*30%*3)/30
=$5814.7

a2)On ann average there is $5814.7 that is pending to be received to the firm.

b1)weighted average delay
=((2*70%*47*5700)+(3*30%*5700*79))/((70%*47*5700)+(30%*79*5700))
=2.42 days

b2)average daily float=((2*70%*47*5700)+(3*30%*5700*79))/30
=780,330/30
=26,011

.
c)Total collections=(70%*47*5700)+(30%*5700*79)
=322,620
weighted average delay=((2*70%*47*5700)+(3*30%*5700*79))/322620
=2.42 days
=2.42*(322620/30)
=26,011

d)daily cost of the float is product of weighted avg delay and avg check received per month
1.06=(1+R)^365
R=0.0160%

Daily cost of float=26011*0.0160%
=$4.16

e)=2*(322620/30)

=21,508

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