Question: A mail - order firm processes 5 , 8 0 0 cheques per day. Of these, 6 0 percent are for 4 9 and 4

A mail-order firm processes 5,800 cheques per day. Of these, 60 percent are for 49 and 40 percent are for 84. The 49 cheques are delayed two days on average; the 84 cheques are delayed three days on average. Assume 30 days in a month. a. What is the average daily collection float? How do you interpret your answer? b. What is the weighted average delay? Use the result to calculate the average daily float. c. How much should the firm be willing to pay to eliminate the float? d. If the interest rate is 7 percent per year, calculate the daily cost of the float. e. How much should the firm be willing to pay to reduce the weighted average float by 1.5 days?

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