Purple Feet Wine Inc. receives an average of $16,000 in cheques per day. The delay in clearing

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Purple Feet Wine Inc. receives an average of $16,000 in cheques per day. The delay in clearing is typically three days. The current interest rate is 0.018 percent per day.

a. What is the company’s float?

b. What is the most Purple Feet should be willing to pay today to eliminate its float entirely?

c. What is the highest daily fee the company should be willing to pay to eliminate its float entirely?

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Corporate Finance

ISBN: 978-0071339575

7th Canadian Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro

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Question Posted: Jun 17, 2015 04:52 AM

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Purple Feet Wine Inc. receives an average of $16,000 in cheques per day. The delay in clearing

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a The collection float is the average daily checks received times the average number of days fo...View the full answer

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