A Mail-Order Firm Processes 5,000 Checks Per Month

question 92

Multiple Choice

A mail-order firm processes 5,000 checks per month.Of these,55 percent are for $55 and 45 percent are for $65.The $55 checks are delayed 2 days on average; the $65 checks are delayed 5 days on average.Assume each month has 30 days.The interest rate is 6 percent per year.How much should the firm be willing to pay to reduce the weighted average float by 1.4 days?

• A)$4,165
• B)$13,883
• C)$41,650
• D)$138,883
• E)$416,500

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Definitions:

Voluntary Petition

A legal document filed by an individual or business entity to declare bankruptcy of their own accord.

Creditor's Claim

A demand for payment submitted by a creditor to a debtor, often as part of a bankruptcy proceeding or estate settlement.

Debtor's Creditors

Entities or individuals to whom money is owed by the debtor.

Proof of Claim

A document filed by a creditor in a bankruptcy proceeding that outlines the amount owed by the debtor and the basis for the claim.