Bavarian Brew Float Bavarian Brew Receives About 350 Checks a Day with an Day

question 53

Multiple Choice

Bavarian Brew Float
Bavarian Brew receives about 350 checks a day with an average check size of $550. Currently customer’s payments spend 2 days in the mail. Once a check is received it takes about 1.5 days to process it and another 4 days to clear the banking system. The firm’s opportunity cost is 10%. Assume a 365-day year.

-Bavarian Brew is contemplating implementing a collection system that would decrease the collection float by 2.5 days.What would be the annual benefit of that system?

• A) $481,250
• B) $48,125
• C) $96,250
• D) $75,480

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