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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

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 4MC
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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
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
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