Question

Purple Feet Wine, Inc., receives an average of $14,000 in checks per day. The delay in clearing is typically four days. The current interest rate is .018 percent per day. a. What is the company's float?

Answer 1

The correct answer is $56,000.

Step-by-step explanation:

According to the scenario, the given data are as follows:

Average checks per day = $14,000

Days in clearing = 4 days

Interest rate = 0.018% per day

So, we can calculate the company's float by using following formula:

Company's Float = Average checks per day × Days in clearing

By putting the value in the formula, we get

Company's Float = $14,000 × 4

= $56,000