Premium-Inn had the following estimated cash flows for the first quarter: January February March Quarter Cash receipts £800,000 £1,000,000 £1,300,000 £3,100,000 Cash disbursements £1,000,000 £1,000,000 £1,000,000 £3,000,000 The company begins the year with £100,000 in cash and requires a minimum cash balance of £30,000. The company may borrow any amount from a local bank at an annual interest rate of 4%, The borrowing must occur at the beginning of any month and all repayments must be made at the end of any month. Interest must be repaid at the time of loan repayment. Required: In good form, prepare the company’s cash budget for the upcoming year.
Premium-Inn had the following estimated cash flows for the first quarter: January February March Quarter Cash receipts £800,000 £1,000,000 £1,300,000 £3,100,000 Cash disbursements £1,000,000 £1,000,000 £1,000,000 £3,000,000 The company begins the year with £100,000 in cash and requires a minimum cash balance of £30,000. The company may borrow any amount from a local bank at an annual interest rate of 4%, The borrowing must occur at the beginning of any month and all repayments must be made at the end of any month. Interest must be repaid at the time of loan repayment. Required: In good form, prepare the company’s cash budget for the upcoming year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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100%
Premium-Inn had the following estimated
|
|
January |
February |
March |
Quarter |
|
Cash receipts |
£800,000 |
£1,000,000 |
£1,300,000 |
£3,100,000 |
|
Cash disbursements |
£1,000,000 |
£1,000,000 |
£1,000,000 |
£3,000,000 |
The company begins the year with £100,000 in cash and requires a minimum cash balance of £30,000. The company may borrow any amount from a local bank at an annual interest rate of 4%, The borrowing must occur at the beginning of any month and all repayments must be made at the end of any month. Interest must be repaid at the time of loan repayment.
Required:
In good form, prepare the company’s
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