Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Sales forecast (figures in 5 millions) A Cash requirements Cash required for operations Interest on bank loan Total cash required B. Cash raised in quarter First $372 Paymore's labor and administrative expenses are $65 per quarter and interest on long-term debt is $40 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $100 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $336. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter Prepare a short-term financing plan using the above table. (Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions of dollars rounded to 2 decimal places.) Line of credit Total cash raised C. Repayments of bank loan D. Addition to cash balances E Line of credit Beginning of quarter End of quarter Quarter in Coming Year Second $360 S S Third $336 First 0.00 $ Fourth $384 0.00 S 0.00 Second Quarter Following Year First Quarter $384 0.00 S 0.00 $ 0.00 Third 0.00 $ 0.00 $ 0.00 Fourth 0.00 0.00 0.00
Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Sales forecast (figures in 5 millions) A Cash requirements Cash required for operations Interest on bank loan Total cash required B. Cash raised in quarter First $372 Paymore's labor and administrative expenses are $65 per quarter and interest on long-term debt is $40 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $100 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $336. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter Prepare a short-term financing plan using the above table. (Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions of dollars rounded to 2 decimal places.) Line of credit Total cash raised C. Repayments of bank loan D. Addition to cash balances E Line of credit Beginning of quarter End of quarter Quarter in Coming Year Second $360 S S Third $336 First 0.00 $ Fourth $384 0.00 S 0.00 Second Quarter Following Year First Quarter $384 0.00 S 0.00 $ 0.00 Third 0.00 $ 0.00 $ 0.00 Fourth 0.00 0.00 0.00
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below
table.
Sales forecast
(figures in 5 millions)
First
$372
A. Cash requirements
Cash required for operations
Interest on bank loan
Total cash required
B. Cash raised in quarter
Line of credit
Total cash raised
Paymore's labor and administrative expenses are $65 per quarter and interest on long-term debt is $40 per quarter. Paymore's cash
balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to
$100 from a line of credit at an interest rate of 2% per quarter. On average, one-third of sales are collected in the quarter that they are
sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $336. On
average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter.
Prepare a short-term financing plan using the above table. (Leave no cells blank. Enter 'O' when necessary. Negative amounts
should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers in millions of dollars rounded to
2 decimal places.)
C. Repayments of bank loan
D. Addition to cash balances
E. Line of credit
Beginning of quarter
End of quarter
Quarter in Coming Year
Second Third
$360
$336
$
$
First
0.00 $
Fourth
$384
0.00 $
0.00
Second
Quarter
0.00 $
0.00 $
Following Year
First Quarter
$384
0.00
Third
0.00 $
0.00 $
0.00
Fourth
0.00
0.00
0.00
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