Based on the information above build a Cash Budget for the expansion. Use Appendix A

Scenario Your family business is expanding. Based on your experience and in depth knowledge of the market, you have estimated the following results for the first 2 years ( 8 quarters) of the project. - Expected revenues for the first two years are as follows. o In addition, sales for the 1st quarter of Year 3 are projected at $370,000. - General and administrative expenses (wages, taxes, office etc.) are estimated to be 15% of sales. - Sales salaries and commissions are estimated to be 12% of sales. - Accounts receivable at the beginning of this expansion are $0. - Collection period =30 days - Accounts payable at the beginning of the expansion are $0. - The Company quarterly purchases from suppliers =40% of the next quarter's forecasted sales. - Suppliers are paid on average in 45 days. - You will need to buy new equipment \& furniture in both Year 1Q1 and Q3 for $25,000 (\$50,000 total in Year 1 ). - To help start the expansion you have secured an initial cash loan from the bank of $50,000. Interest on this loan is $1,500 per quarter. The company will pay back the full $50,000 in the Year 2Q4. - Interest on any additional short-term borrowing is expected to be 2% per quarter. The company required return must be at least this each quarter. - The Company wishes to maintain a $50,000 minimum balance at all times to best manage its working capital and any unexpected commitments. Appendix A - Cash Budget