CASH FLOW BUDGET OF A FIRM IS GIVEN IN TABLE FOR FOUR QUATERS (YEARS). IF SAME TREND CONTINUES FOR FIVE YEARS FIND OUT WHICH QUATER IS BEST INTERMS OF NET PROFIT BASED ON FUTURE WORTH ANALYSIS. MANAGMENT EXPECTS INTERST RATE OF 2.5% FOR FIVE YEARS. HINT:DRAW CASHFLOW DIAGRAM.

 

Sample 1. Cash flow budget (by quarter of the year) Cash inflow 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Beginning cash balance Sale of crop products Sale of livestock products Government payments $5,000 $50,000 25,000 $10,000 $10,000 Total inflow $30,000 $50,000 Cash expenditures Seed $10,000 Fertilizer $20,000 Feed 10,000 Processing $10,000 Marketing Capital purchases $5,000 10,000 Interest 5,000 Debt payments Total expenditures 10,000 $20,000 $30,000 $25,000 $5,000 Quarterly net cash flow $10,000 $20,000 -$25,000 $5,000 Cumulative net cash flow $10,000 $30,000 $5,000 $10,000