5. Umbrellas Unlimited receives an average of 120 payments each day. The average payment amount is...
| 5. Umbrellas Unlimited receives an average of 120 payments each day. The average payment amount is $40. The delay in processing and clearing averages 3 days and the daily applicable interest rate is .014%. What is the highest daily fee the firm should pay to completely eliminate its float? |
Homework Answers
Maximum Daily Fee = [(No. of payment * Average Payment amount) * Days taken in clearing] * Daily interest rate
= [(120 * $40) * 3] * 0.014% = $14,400 * 0.00014 = $2.016
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