1143 Words5 Pages

Cash Budget November December January February March April May June July
Sales $220,000 175,000 $90,000 120,000 135,000 240,00 300,000 270,000 225,000
Collections:
Month of Sales (10%) 9,000 12,000 13,500 24,000 30,000 27,000 22,500 First month (60%) 105,000 54,000 72,000 81,000 144,000 180,000 162,000 Second month (30%) 66,000 52,500 27,000 36,000 40,500 72,000 90,000 Total collections 180,000 118,500 112,500 141,000 214,500 279,000 274,500
Purchases 54,000 72,000 81,000 144,000 180,000 162,000 135,000 90,000
Payments 54,000 72,000 81,000 144,000 180,000 162,000 135,000 90,000
Cash receipts 180,000 118,500 112,500 141,000 214,500 279,000 274,500 Cash Disbursements*…show more content…*

a) Prepare a cash budget for Sharpe covering the first seven months of 2004. b) Sharpe has $220,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes? No, the firm will not have enough cash to pay the notes payable. Although there is enough ending cash if $200,000 is spent on the notes payable then there will be an insufficient amount to purchase raw materials or other expenditures. If the firm decides to use its cash for the notes payable it will then have to obtain financing to maintain the cash balance. The firm may need to renegotiate its notes payable and obtain additional financing to maintain the minimum cash balance of $15,000. 5-1A (Compound Interest) To what amount will the following investments accumulate? a. $5,000 invested for 10 years at 10 percent compounded annually rate (i)= 10% number of periods (n) = 10 Payment (PMT) = $0 present value (PV) = $5,000 type (0 at end of = period) = 0 Future value (FV) =*…show more content…*

$25 a year for 3 years compounded annually at 2 percent rate (i)= 2% number of periods (n) = 3 present value (PV) = $25 type (0 at end of period) = 0 Future value (FV) = $76.51 5-6A (Present value of an annuity) What is the present value of the following annuities? a. $2,500 a year for 10 years discounted back to the present at 7 percent rate (i)= 7% number of periods (n) = 10 Future value (FV) = $2,500 type (0 at end of period) = 0 Present value (PV) = $17,558.95 b. $70 a year for 3 years discounted back to the present at 3 percent rate (i)= 3% number of periods (n) = 3 Future value (FV) = $70 type (0 at end of period) = 0 Present value (PV) = $198.00 c. $280 a year for 7 years discounted back to the present at 6 percent rate (i)= 6% number of periods (n) = 7 Future value (FV) = $280 type (0 at end of period) = 0 Present value (PV) = $1,563.07 d. $500 a year for 10 years discounted back to the present at 10 percent rate (i)= 10% number of periods (n) = 10 Future value (FV) = $500 type (0 at end of period) = 0 Present value (PV) =

a) Prepare a cash budget for Sharpe covering the first seven months of 2004. b) Sharpe has $220,000 in notes payable due in July that must be repaid or renegotiated for an extension. Will the firm have ample cash to repay the notes? No, the firm will not have enough cash to pay the notes payable. Although there is enough ending cash if $200,000 is spent on the notes payable then there will be an insufficient amount to purchase raw materials or other expenditures. If the firm decides to use its cash for the notes payable it will then have to obtain financing to maintain the cash balance. The firm may need to renegotiate its notes payable and obtain additional financing to maintain the minimum cash balance of $15,000. 5-1A (Compound Interest) To what amount will the following investments accumulate? a. $5,000 invested for 10 years at 10 percent compounded annually rate (i)= 10% number of periods (n) = 10 Payment (PMT) = $0 present value (PV) = $5,000 type (0 at end of = period) = 0 Future value (FV) =

$25 a year for 3 years compounded annually at 2 percent rate (i)= 2% number of periods (n) = 3 present value (PV) = $25 type (0 at end of period) = 0 Future value (FV) = $76.51 5-6A (Present value of an annuity) What is the present value of the following annuities? a. $2,500 a year for 10 years discounted back to the present at 7 percent rate (i)= 7% number of periods (n) = 10 Future value (FV) = $2,500 type (0 at end of period) = 0 Present value (PV) = $17,558.95 b. $70 a year for 3 years discounted back to the present at 3 percent rate (i)= 3% number of periods (n) = 3 Future value (FV) = $70 type (0 at end of period) = 0 Present value (PV) = $198.00 c. $280 a year for 7 years discounted back to the present at 6 percent rate (i)= 6% number of periods (n) = 7 Future value (FV) = $280 type (0 at end of period) = 0 Present value (PV) = $1,563.07 d. $500 a year for 10 years discounted back to the present at 10 percent rate (i)= 10% number of periods (n) = 10 Future value (FV) = $500 type (0 at end of period) = 0 Present value (PV) =

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