Consider the case of Mooney Equipment: Mooney Equipment is putting together its cash budget for the following year and has forecasted expected cash collections over the next five quarters (one year plus the first quarter of the next year). The cash collection estimates are based on sales projections and expected collection of receivables. The sales and cash collection estimates are shown in the following table (in millions of dollars): Q4 Q5 Sales Q1 $1,100 $1,100 Q2 $1,400 $1,150 Q3 $1,450 $1,200 $1,500 $1,250 $1,200 Total cash collections You also have the following information about Mooney Equipment: In any given period, Mooney's purchases from suppliers generally account for 80% of the expected sales in the next period, and wages, supplies, and taxes are expected to be 15% of next period's sales. In the third quarter, Mooney expects to expand one of its plants, which will require an additional $1,080 million investment. Every quarter, Mooney pays $60 million in interest and dividend payments to long-term debt and equity investors. Mooney prefers to keep a minimum target cash balance of at least $16 million at all times. Using the preceding information, answer the following questions: -$290 million -$288 million -$1,128 million -$285 million What is the net cash inflow that Mooney expects in the first quarter (Q1)? -$538 million -$1,666 million -$250 million -$1,951 million If Mooney is beginning this year with a cash balance of $40 million and expects to maintain a minimum target cash balance of at least $16 million, what will be its likely cash balance at the end of the year (after Q4)? - $186 million - $133 million - $226 million - $266 million What is the maximum investable funds that the firm expects to have in the next year? What is the largest cash deficit that the firm expects to suffer in the next year? -$1,180 million -$1,967 million -$1,377 million - $984 million True or False: Based on the surplus or deficit derived from the cash budget, managers negotiate for short-term loans with banks. They often add a cushion to the difference between forecasted ending cash balance and the minimum target cash balance. O False True