Float Simon Corporation has daily cash receipts of $50,000. A recent analysis of its collections...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Float Simon Corporation has daily cash receipts of $50,000. A recent analysis of its collections indicated that customers' payments were in the mail an average of 3.5 days. Once received, the payments are processed in 2.0 days. After payments are deposited, it takes an average of 3.0 days for these receipts to clear the banking system. a. How much collection float (in days) does the firm currently have? b. If the firm's opportunity cost of capital is 8%, would it be economically advisable for the firm to pay an annual fee of $16,000 to reduce collection float by 3 days? Explain why or why not c. What would the company's opportunity cost have to be to make the $16,000 fee worthwhile
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.