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30 October, 00:55

No More Pencils, Inc., disburses checks every two weeks that average $87,000 and take six days to clear. How much interest can the company earn annually if it delays transfer of funds from an interest-bearing account that pays 0.011 percent per day for these six days? Ignore the effects of compounding interest

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  1. 30 October, 01:17
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    Interest $1,492.92

    Explanation:

    The company interest will be the amount of the checks multiplied by the number of days it will delay payment then multiply by the number of weeks that checks will be disbursed times the daily interest rate.

    Interest = $87,000 (6) (52 / 2) (.00011)

    Interest = $522,000*26*0.00011

    Interest = $1,492.92

    Therefore $1,492.92 is the amount of interest that the company earn annually if it delays transfer of funds from an interest-bearing account that pays 0.011 percent per day for these six days.
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