annual interest rate? a. are: Issume its all 3 Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. Sales What will be orders in each quarter of the year if the sales forecasts for the next five quarters Cash Quarter in coming year Following Year 1st 2nd 3rd 4th 1st Sales Forecast $375 $360 $336 $384 $384 b. Calculate Paymore's cash payments to its supplier under the assumption that the firm pays for its goods with a one-month delay. Therefore, on average, 2/3 of purchases are paid for in the quarter that they are purchased and 1/3 are paid in the following quarter. c. Assuming that Paymore's labor and administrative expenses are $65 per quarter and that interest on long term debt is $40 per quarter, work out the net cash inflow for Paymore for the coming year using a table like Table 19.7 (p.604 in text). d. Suppose Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Work out the short term financing requirement for the firm in the coming year using a table like Table 19.8 (p.604 in text) The firm pays no dividend. e. Now assume that Paymore can borrow up to $100 from a line of credit at an interest rate of 2% per quarter. Prepare a short term financing plan. (Use Table 19.9 on p. 607 to guide your answer)
annual interest rate? a. are: Issume its all 3 Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. Sales What will be orders in each quarter of the year if the sales forecasts for the next five quarters Cash Quarter in coming year Following Year 1st 2nd 3rd 4th 1st Sales Forecast $375 $360 $336 $384 $384 b. Calculate Paymore's cash payments to its supplier under the assumption that the firm pays for its goods with a one-month delay. Therefore, on average, 2/3 of purchases are paid for in the quarter that they are purchased and 1/3 are paid in the following quarter. c. Assuming that Paymore's labor and administrative expenses are $65 per quarter and that interest on long term debt is $40 per quarter, work out the net cash inflow for Paymore for the coming year using a table like Table 19.7 (p.604 in text). d. Suppose Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Work out the short term financing requirement for the firm in the coming year using a table like Table 19.8 (p.604 in text) The firm pays no dividend. e. Now assume that Paymore can borrow up to $100 from a line of credit at an interest rate of 2% per quarter. Prepare a short term financing plan. (Use Table 19.9 on p. 607 to guide your answer)
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:annual interest rate?
a.
are:
Issume its all
3 Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter.
Sales
What will be orders in each quarter of the year if the sales forecasts for the next five quarters
Cash
Quarter in coming year
Following Year
1st
2nd
3rd
4th
1st
Sales Forecast
$375
$360
$336 $384
$384
b. Calculate Paymore's cash payments to its supplier under the assumption that the firm pays
for its goods with a one-month delay. Therefore, on average, 2/3 of purchases are paid for
in the quarter that they are purchased and 1/3 are paid in the following quarter.
c. Assuming that Paymore's labor and administrative expenses are $65 per quarter and that
interest on long term debt is $40 per quarter, work out the net cash inflow for Paymore for
the coming year using a table like Table 19.7 (p.604 in text).
d. Suppose Paymore's cash balance at the start of the first quarter is $40 and its minimum
acceptable cash balance is $30. Work out the short term financing requirement for the firm
in the coming year using a table like Table 19.8 (p.604 in text) The firm pays no dividend.
e. Now assume that Paymore can borrow up to $100 from a line of credit at an interest rate
of 2% per quarter. Prepare a short term financing plan. (Use Table 19.9 on p. 607 to guide
your answer)
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