Construct a short-term financial plan for Springfield Snowboards based on its expansion opportunity described in the "Positive Cash Flow Shocks" part of Section 20.1. Base the plan on the following table, which forecasts additional capital expenditures, marketing (SG&A), and working capital in Q1 and Q2 along with higher sales in Q2 to Q4. Assume that Springfield ends 2017 with $1 million in cash and that its bank will offer it a short-term loan at the rate 2.5% per quarter. Assume that the minimum cash balance to be maintained is $500,000.

2017Q4 2018Q1 2018Q2 2018Q3 201804 4,545 2,955 455 1,135 455 680 239 441 5,000 3,250 1,000 750 500 250 88 162 6,000 6,000 3,900 3,900 600 600 1,500 1,500 525 525 975 975 341 341 634 634 6,000 3,900 600 1,500 525 975 341 634 634 634 441 0 162 500 634 525 525 525 Quarter Income Statement ($000) Sales - Cost of Goods Sold - SellingGen., and Admin. EBITDA - Depreciation EBIT - Taxes Net Income Statement of Cash Flow Net Income Depreciation Changes in Working Capital: Accounts Receivable Inventory Accounts Payable Cash from Operating Act. Capital Expenditures Other Investments Cash from Investing Act. Net Borrowing - Dividends Capital Contributions Cash from Financing Act. Change in Cash Equiv. -136 -300 0 0 48 574 -1,500 0 -1,500 0 0 0 0 -926 105 964 -525 0 -525 0 0 0 0 439 0 1,159 -525 0 -525 0 0 0 0 634 0 1,159 -525 0 -525 0 0 0 0 634 2018Q1 2018Q2 2018Q3 Cash Balance and Short- 201704 Term Financing ($000) Starting Cash Balance Change in Cash and Equivalents Minimum Cash Balance 500 500 500 (sur (sur (sur Surplus (Deficit) Relative to Minimum Existing Short-term Financing Increase (Decrease) in Short- Term Financing Total Short-term Financing Ending Cash Balance 1000 Answer: The correct statement from the following is (answer "A", "B", "C", or "D") A. They will need to borrow $426,000 for the first quarter of 2018, and they will pay back the loan during Q4 of 2018. B. They will need to borrow $426,000 for the second quarter of 2018, and they will pay back the loan during Q3 of 2018. C. They will need to borrow $426,000 for the first quarter of 2018, and they will pay back the loan during Q2 of 2018. D. They will need to borrow $426,000 for the third quarter of 2018, and they will pay back the loan during Q4 of 2018