Chapter $4$ Homework $$ Fall $2022$ FIN $470$

Precise Speed Inc., a laser printer manufacturer, has the following forecasted sales for $2018$:

January February March April May June July

$$200,000$ $$350,000$ $$400,000$ $$350,000$ $$300,000$ $$250,000$ $$300,000$

Actual sales in November and December $2017$ were $$375,000$ and $266,667,$ respectively. Sixty percent of sales are on credit. The firm collects $60\%$ of these credit sales during the first after the sale and the remainder during the following second month. Purchases constitute $60\%$ of the next month$$s sales. The company pays $50\%$ during the first month after the purchase was made and the remainder in the next month. Wages, taxes, and other expenses are expected to be $30\%$ of forecasted sales. A major capital expenditure of $$70,000$ is expected in March. Interest payments are expected to be $$30,000$ every month and the company needs a minimum cash balance of $$25,000.$ The beginning cash balance is $$30,000.$

a$)$ Using the provided simple cash budget example like what we did in class, help the financial staff of Precise Speed Inc., to prepare their cash budget for January to June $2018.$ Use an interest rate of $9\%$ for any borrowings.Chapter $4$ Homework $$ Fall $2022$ FIN $470$

Precise Speed Inc., a laser printer manufacturer, has the following forecasted sales for $2018$:

January February March April May June July

$$200,000$ $$350,000$ $$400,000$ $$350,000$ $$300,000$ $$250,000$ $$300,000$

Actual sales in November and December $2017$ were $$375,000$ and $266,667,$ respectively. Sixty percent of sales are on credit. The firm collects $60\%$ of these credit sales during the first after the sale and the remainder during the following second month. Purchases constitute $60\%$ of the next month$$s sales. The company pays $50\%$ during the first month after the purchase was made and the remainder in the next month. Wages, taxes, and other expenses are expected to be $30\%$ of forecasted sales. A major capital expenditure of $$70,000$ is expected in March. Interest payments are expected to be $$30,000$ every month and the company needs a minimum cash balance of $$25,000.$ The beginning cash balance is $$30,000.$

a$)$ Using the provided simple cash budget example like what we did in class, help the financial staff of Precise Speed Inc., to prepare their cash budget for January to June $2018.$ Use an interest rate of $9\%$ for any borrowings.