Chapter 20

Problems 3,5,6,8
Input boxes in tan
Output boxes in yellow
Given data in blue
Calculations in red
Answers in green
Chapter 20
Question 3
Input Area:
Clearing time
Value of checks per day
Interest rate
Days per month
Output:
a. Collection float - $
b. The firm should pay no more than
- $ to eliminate
the float.
c. Maximum daily charge - $
Chapter 20
Question 5
Input Area:
Average receipt
Decreased collection time
# Checks per day
Interest rate
Bank fee per day
Output:
Average daily collections - $
PV - $
Cost #DIV/0!
NPV #DIV/0!
#DIV/0!
Annual savings - $
Annual cost - $
Annual net savings - $
Chapter 20
Question 6
Input Area:
# Checks per day
% of check #1
Value of check #1
Average delay check #1
% of check #2
Value of check #2
Average delay check #2
d. Interest rate
e. Weighted average float
# of days per month
Output:
a. Average daily float #DIV/0!
On average, there is #DIV/0!
that is uncollected and not available to the firm.
b. Total collections - $
Weighted average delay #DIV/0!
Average daily float #DIV/0!
c. The most the firm should pay is the total amount
of the average float or #DIV/0!
d. Daily interest rate 0.00000%
Daily cost of float #DIV/0!
e. Price to reduce float #DIV/0!
Chapter 20
Question 8
Input Area:
# days to receive checks
Average daily collections
Required return
Decreased collection time
# of days per month
# of days per year
Output:
a. Reduction in outstanding cash - $
b. Average daily rate 0.0000%
Dollar return - $
c. Monthly rate 0.0000%
Monthly price - $