Question

Your neighbor goes to the post office once a month and picks up two checks, one for $11,000 and one for $3,400. The larger check takes four days to clear after it is deposited; the smaller one takes five days. Assume 30 days in a month.

a. What is the total float for the month?

b. What is the average daily float?

c-1. What are the average daily receipts?

c-2. What is the weighted average delay?

Answer 1

Answer/explanation:

a. The total float for the month can be calculated as follows:The delay for the larger check is 4 days, and the delay for the smaller check is 5 days, therefore the float is 4 + 5 = 9 days.The total float for the month is $14,400 ($11,000 + $3,400).Thus, the total float for the month is $14,400 for a period of 9 days.

b. The average daily float can be calculated as follows:Average daily float = Total float / Number of days in the periodAverage daily float = $14,400 / 30 daysAverage daily float = $480

Therefore, the average daily float is $480.

c-1. The average daily receipts can be calculated as follows:The total receipts for the month are $14,400, so the average daily receipts are:Average daily receipts = Total receipts / Number of days in the periodAverage daily receipts = $14,400 / 30 daysAverage daily receipts = $480

Therefore, the average daily receipts are $480.

c-2. The weighted average delay can be calculated as follows:Weighted average delay = (Delay for larger check * Amount of larger check + Delay for smaller check * Amount of smaller check) / Total amountWeighted average delay = (4 days * $11,000 + 5 days * $3,400) / $14,400Weighted average delay = $77,600 / $14,400Weighted average delay = 5.39 days (rounded to two decimal places)

Therefore, the weighted average delay is 5.39 days.