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Vesna [10]
4 years ago
10

The firm receives an average of $20,000 in checks per day. The weighted average delay in clearing the checks received is 3 days.

Meanwhile, the firm writes an average of $17,000 in checks to pay its suppliers per day. The usual clearing time for the checks the firm wrote is 2 days. The current interest rate is 0.015 percent per day. What is the most the firm should be willing to pay today (in a lump sum today) to eliminate its float entirely? A) 3000 B) 26000 C) 34000 D) 37000 E) 60000
Business
1 answer:
katrin [286]4 years ago
5 0

Answer:

<u>$26000</u>

Explanation:

from the question;

check per day; 20000

delay: 3 days

checks to pay suppliers; 17000

clearing time 2 days

<u>we first calculate collection flaot:</u>

collection flaot = average amount of check x outstanding days

= 20000 x 3

= 60000

now we have to calculate <u>disbursements float:</u>

average amount of check x days to clear

= 17000 x 2

= 34000

with these two values we can get the net float

= collection flaot - disbursements float

= 60000 - 34000

= <u>$26000</u>

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