Cash flows Sheldon Smith spends many hours monitoring his personal cash flows every month. Sheldon earns 5% on his short-term investments while paying prime plus 2% (prime is 9%) on the mortgage. The cash inflows and outflows for the month of March are as follows:

LG 4 Item Cash inflow Cash outflow Interest received $ 500 Mortgage +1,550 Salary 5,500 Groceries bill 850 Gas bill 200 Utility bills 310

a. Determine Sheldon’s total cash inflows and cash outflows for the month of March.

b. What is Sheldon’s net cash flow for the month of March? Explain the meaning of the term “net cash flow.”

c. What advice would you give Sheldon if there is a surplus of funds?

d. What advice would you give Sheldon if there is a shortage of funds?