Value of Delay [LO2] No More Pencils, Inc., disburses checks every two weeks that average $93,000 and take seven days to clear. How much interest can the company earn annually if it delays transfer of funds from an interest-bearing account that pays .015 percent per day for these seven days? Ignore the effects of compounding interest.
The interest that the company could earn will be the amount of the checks times the number of days it will delay payment times the number of weeks that checks will be disbursed times the daily interest rate, so:
Interest = $93,000(7)(52/2)(0.00015)
Interest = $2,538.90
Value of Delay [LO2] No More Pencils, Inc., disburses checks every two weeks that average $93,000 and take seven days to...