On an average day,a company writes checks totaling $1,500. These checks take 7 days to clear. The company receives checks totaling $1,800. These checks take 4 days to clear. The cost of debt is 9%. If the average daily float is $3,300,what is the net present value per day?

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Quizplus · Accepted Answer

The net float is $1,500 * 7 - $1,800 * 4 = $10,500 - $7,200 = $3,300. The cost of debt is 9% annually, so the daily rate is 9%/365. The NPV per day is $3,300 * (9%/365) = $0.81. Since it's a cost, it's negative: $-0.81.

On an Average Day,a Company Writes Checks Totaling $1,500