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Unformatted text preview: 4-6A Cash budget) The sharpe corporations projected sales for the eight months of 200 are as follows: January 90,000, february 120,000, march 135,000, april 240,000, ,may 300,000 june 270,000 july 225,000 august 150,000. Of sharpes sales, 10 percent is for cash, another 60 percent is collected in the month following sale. November and December sales for 2003 were 220,000 and 175,000 respectively. Sharpe purchases its raw materials two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery. For example purchases for april sales are made in February and payment is made in march. In addition sharpe pays 10,000 per month for rent and 20,000 each month for other expenditures. Tax prepayments of 22,500 are made each quarter, beginning in march. The companys cash balance at December 31, 2003 was 22,000 a minimum balance of 15,000 must be maintained at all times. Assume that any short term financing needed to maintain the cash balance is paid off in the month following the month of financing if sufficient funds are available. Interest on short-term loans 12 percent is paid monthly. Borrowing to meet estimated monthly cash needs takes place at the beginning of the month. Thus if in the month of april the firm expects to have a need for an additional 60,500, these funds x 1/12 x 60,500 owed for april and paid at the beginning of may. a. Prepare a cash budget for sharpe covering the first seven months of 2004. b. B. sharpe has 200,000 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. Please see the attached excel sheet5-1 a to what amount will the following investments accumulate? a.5,000 invest D for 10 years at 10 percent compounded annually b. 8,000 invested for 7 years at 8 percent compounded annually c. 775 invested for 12 years at 12 percent compounded annually d. 21,000 invested for 5 years at 5 percent compounded annually. 5-1.a.FVn=PV (1 + i)n FV10=$5,000(1 + 0.10)10FV10=$5,000 (2.594)FV10=$12,970b.FVn=PV (1 + i)n FV7=$8,000 (1 + 0.08)7 FV7=$8,000 (1.714)FV7=$13,712c.FV12=PV (1 + i)n FV12=$775 (1 + 0.12)12FV12=$775 (3.896)FV12=$3,019.40d.FVn=PV (1 + i)nFV5=$21,000 (1 + 0.05)5FV5=$21,000 (1.276)FV5=$26,796.005-2A. (Compound value solving for n) How many years will the following take?a. $500 to grow to $1,039.50 if invested at 5 percent compounded annuallyb. $35 to grow to $53.87 if invested at 9 percent compounded annuallyc. $100 to grow to $298.60 if invested at 20 percent compounded annuallyd. $53 to grow to $78.76 if invested at 2 percent compounded annually(a)FVn=PV (1 + i)n$1,039.50=$500 (1 + 0.05)n2.079=FVIF 5%, n yr....
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This note was uploaded on 06/20/2011 for the course ACCT 101 taught by Professor Joannes during the Spring '11 term at Aarhus Universitet.
- Spring '11