Question: Question 5 [10 marks] Suppose the average daily float is $5 million with a weighted average delay of 5 days. Consider the following questions a.

Question 5 [10 marks] Suppose the average daily float is $5

Question 5 [10 marks] Suppose the average daily float is $5 million with a weighted average delay of 5 days. Consider the following questions a. What is the total amount unavailable to earn interest? b. What is the NPV of a project that could reduce the delay by 4 days if the cost is $8 million? Is it worthwhile doing such an effort? Useful formulas: NPV of eliminating the float =( Total amount unavailable to earn interest ( original delay days - reduced days) Average daily float) - cost of float elimination

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