A mailorder firm processes 5700 checks per month Of these 70

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.

  On average, there is $ that is (Click to select)collecteduncollected and (Click to select)not availableavailable to the firm.

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

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))

$

Please answer completely

Solution

b1) Weighted average delay = 0.70*2+0.30*3 = 1.4+0.9 = 2.3 days

b2) Average daily float = ((0.7*5700*47+0.3*5700*79)*2.3)/30 = $24734.2

c) Maximum payment to eliminate the float = 26100-24734.2 = $1365.8

d) Daily cost of float = 1365.8 + 1365.8*6*1/(100*12*30) = 1365.8 + 0.228 = $1366.028

e) Maximum payment the firm is willing to pay to reduce the weighted average float to 2 days

                    = 26100- ((0.7*5700*47+0.3*5700*79)*2)/30

                    = $4592