Instead of eliminating the float, suppose Lambo can reduce it to one day. What is the maximum

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Instead of eliminating the float, suppose Lambo can reduce it to one day. What is the maximum Lambo should be willing to pay for this? If Lambo can reduce the float from three days to one day, then the amount of the float will fall from $3,000 to $1,000. From our immediately preceding discussion, we see right away that the PV of doing this is equal to the $2,000 float reduction. Lambo should be willing to pay up to $2,000.

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Corporate Finance

ISBN: 9781265533199

13th International Edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe

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