Littleton Electronics ending cash balance as of January 31, 2005, (the end of its fiscal year 2004)

Littleton Electronicsí ending cash balance as of January 31, 2005, (the end of its fiscal year 2004) was $25,000. Its expected cash collections and payments for the next six months are given in the following table.

TABLE 3-5 FUNCTIONS INTRODUCED IN THIS CHAPTER Purpose Function Page Returns a value based on a logical test IF(LOGICAL_TEST, VALUE_IF_TRUE, VALUE_IF_FALSE)

76 Determines the minimum of a list of arguments MIN(NUMBER1, NUMBER2,...) 86 Returns true only if all arguments are true AND(LOGICAL1, LOGICAL2, ...) 91 Month Collections Payments February $15,000 $18,000 March $17,500 $19,700 April $21,300 $24,200 May $26,000 $25,900 June $32,000 $26,700 July $37,500 $28,400

a. Calculate the firmís expected ending cash balance for each month.

b. Assuming that the firm must maintain an ending cash balance of at least $20,000, how much must they borrow during each month?

c. If the firm must pay 8% annual interest on its short-term borrowing, how does this affect your ending cash balance calculations?

d. Finally, how would your ending cash balance change if the firm uses any cash in excess of the minimum to pay off its short-term borrowing in each month?