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. First $374 Quarter in Coming Year Third $338 Fourth $386 Following Year First Quarter $386 Second Sales forecast $362 Paymore's labor and administrative expenses are $67 per quarter and interest on long-term debt is $42 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 $338 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 $338. 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. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places.) X Answer is not complete. Quarter (figures in $ millions) First Second Third Fourth A. Cash requirements Cash required for operations Interest on bank loan 0.00 O Total cash required 0.00 0.00 IS 0.00 2$ 0.00 B. Cash raised in quarter Line of credit Total cash raised 0.00 0.00 Is 0.00 0.00 C. Repayments of bank loan 0.00 V Is 0.00 V $ 0.00 O D. Addition to cash balances 0.00 $ 0.00 O Is 0.00 O $ 0.00 E. Line of credit Beginning of quarter 0.00 V End of quarter 0.00 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. First $374 Quarter in Coming Year Third $338 Fourth $386 Following Year First Quarter $386 Second Sales forecast $362 Paymore's labor and administrative expenses are $67 per quarter and interest on long-term debt is $42 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 $338 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 $338. 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. Round order, payment, and collection calculations to the nearest whole number. Enter your answers in the Table in millions of dollars, rounded to 2 decimal places.) X Answer is not complete. Quarter (figures in $ millions) First Second Third Fourth A. Cash requirements Cash required for operations Interest on bank loan 0.00 O Total cash required 0.00 0.00 IS 0.00 2$ 0.00 B. Cash raised in quarter Line of credit Total cash raised 0.00 0.00 Is 0.00 0.00 C. Repayments of bank loan 0.00 V Is 0.00 V $ 0.00 O D. Addition to cash balances 0.00 $ 0.00 O Is 0.00 O $ 0.00 E. Line of credit Beginning of quarter 0.00 V End of quarter 0.00 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
Related questions
Question
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.
Following Year
Quarter in Coming Year
Second
$362
Third
$338
Fourth
$386
First
First Quarter
Sales forecast
$374
$386
Paymore's labor and administrative expenses are $67 per quarter and interest on long-term debt is $42 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
$338 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 $338. 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. Round order, payment, and collection calculations to the nearest whole number. Enter your
answers in the Table in millions of dollars, rounded to 2 decimal places.)
X Answer is not complete.
Quarter
(figures in $ millions)
First
Second
Third
Fourth
A. Cash requirements
Cash required for operations
Interest on bank loan
0.00 V
Total cash required
0.00
2$
0.00
0.00
0.00
B. Cash raised in quarter
Line of credit
Total cash raised
0.00
$
0.00
S
0.00
$
0.00
C. Repayments of bank loan
0.00 V
0.00 V $
0.00 V
D. Addition to cash balances
0.00 O $
0.00
IS
0.00
$
0.00 V
E. Line of credit
Beginning of quarter
0.00 V
End of quarter
0.00
0.00
0.00
0.00
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education