Ron's cheque book shows a balance of $400. A recent statement from the bank (received last week) shows that all cheques written as of the date of the statement have been paid, except numbers 325 and 326, which were for $35.00 and $58.00, respectively. Since the statement date, cheques 327, 328, and 329 have been written for $22.00, $45.00, and $17.00, respectively.
There is an 80 percent probability that cheques 325 and 326 have been paid by this time. There is a 50 percent probability that cheques 327, 328, and 329 have been paid.
a. What is the total value of the five cheques outstanding?
b. What is the expected value of payments for the five cheques outstanding?
c. What is the difference between parts a and b? This represents a type of float.