Question
A company is forecasting its next year's financials and will calculate a cash plug. Outside of this cash plug, the company will carry negligible other
A company is forecasting its next year's financials and will calculate a cash plug. Outside of this cash plug, the company will carry negligible other cash and will have no debt. All other assets are forecasted to be $9,875, while all other liabilities are forecasted to be $4,473. Beginning retained earnings for the forecast year will be $5,170. All equity items other than the retained earnings balance will be $1,662. Earnings before interest and taxes are estimated to be $4,973. If the forecasted interest rate earned on the cash is 7.86% and the income tax rate remains at 30%, what is the absolute value of the forecasted cash as a plug? Assume the company pays no dividends.
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