Connect Exam Solution Homework 7-8

# Order is 080 times the following quarters sales

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Unformatted text preview: of the preceding year would have been 0.80 7 of 9 12/3/2012 11:52 AM Fundamentals of Corporate Finance (McGraw Hill Connect Exam Solution) http://www.vuzs.net/extra-notes/29-fin622-corporate-finance/5530-fund... × \$510 = \$408. Quarter Payment* 1 (1/4 × \$408) + (3/4 × \$400) = \$402 2 (1/4 × \$400) + (3/4 × \$376) = \$382 3 (1/4 × \$376) + (3/4 × \$416) = \$406 4 (1/4 × \$416) + (3/4 × \$416) = \$416 *Payment = [(1/4) × previous period order] + [(3/4) × current period order]. Quarter Collections* 1 (2/4 × \$470) + (2/4 × \$510) = \$490 2 (2/4 × \$510) + (2/4 × \$500) = \$505 3 (2/4 × \$500) + (2/4 × \$470) = \$485 4 (2/4 × \$470) + (2/4 × \$520) = \$495 *Collections = [(2/4) × previous period sales] + [(2/4) × current period sales]. Quarter First Second Third Fourth \$ 490 \$ 505 \$ 485 \$ 495 Payments of accounts payable 402 382 406 416 Labor &amp; administrative expenses 70 70 70 70 Interest on long-term debt 42 42 42 42 Sources of cash Collections on accounts receivable Uses of cash Total uses of cash \$ 514 \$ 518 \$ 528 \$ −24 Net cash inflow \$ 494 \$ +11 \$ −33 \$ −33 Recalculate Dynamic Mattress’s financing plan assuming that the firm wishes to mainta10. in a minimum cash balance of \$10 million instead of \$5 million. Assume the firm can convince the bank to extend its line of credit to \$50 million. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter &quot;0&quot; wherever required. Do not round intermediate calculations. Enter your answers in millions rounded to 2 decimal places.) Quarter First Second Third Fourth A. Cash requirements Cash required for operations \$ \$ 20.00 \$ −24.00 \$ −32.00 Interest on bank loan Interest on stretched payables 8 of 9 12/3/2012 11:52 AM Fundamentals of Corporate Finance (McGraw Hill Connect Exam Solution) Total cash required http://www.vuzs.net/extra-notes/29-fin622-corporate-finance/5530-fund... \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ \$ B. Cash raised in quarter Bank loan Stretched payables Securities sold Total cash raised C. Repayments Of stretched payables Of bank loan D. Addition to cash balances E. Bank Loan Beginning of quarter End of quarter ITT Tech - Official Site Tech-Oriented Degree Programs. Education for the Future. www.ITT-Tech.edu 9 of 9 12/3/2012 11:52 AM...
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## This note was uploaded on 10/06/2013 for the course BUSI 530 taught by Professor Woo during the Fall '11 term at Liberty.

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