Cottonwood Inc had sales of $136 in Q4 of last year and has estimated sales (in millions) for the next four quarters as follows Q1 Q2 Q3 Q4 Sales $ 160 $ 175 $ 190 $ 215 Sales for the first quarter of the year after this one are projected at $170 million Accounts receivable at the beginning of the year were $68 million Cottonwood has a 45 day collection period Cottonwoods purchases from suppliers in a quarter are equal to 45 of the next quarters forecast sales, and suppliers are normally paid in 36 days Wages, taxes, and other expenses run about 25 of sales Interest and dividends are $12 million per quarter Cottonwood plans a major capital outlay in the second quarter of $75 million Finally, the company started the year with a $49 million cash balance and wishes to maintain a $30 million minimum balance a Complete the following cash budget for Cottonwood (Negative answers should be indicated by a minus sign Enter the answers in millions Do not round intermediate calculations Round the final answers to 2 decimal places Omit $ sign in your response ) COTTONWOOD INC Cash Budget (in $ millions) Q1 Q2 Q3 Q4 Beginning cash balance $49 00 $ $ $ Net cash inflow Ending cash balance $ $ $ $ Minimum cash balance 30 00 30 00 30 00 30 00 Cumulative surplus (deficit) $ $ $ $ Assume that Cottonwood can borrow any needed funds on a short term basis at a rate of 3 per quarter and can invest any excess funds in short term marketable securities at a rate of 2 per quarter b 1 Complete the following short term financial plan for Cottonwood Inc (Enter the answers in millions Negative answers should be indicated by a minus sign Do not leave any empty spaces input a 0 wherever it is required Do not round intermediate calculations Round the final answers to 2 decimal places Omit $ sign in your response ) COTTONWOOD INC Short Term Financial Plan (in $ millions) Q1 Q2 Q3 Q4 Beginning cash balance $30 00 $30 00 $30 00 $30 00 Net cash inflow New short term investments Income from short term investments Short term investments sold New short term borrowing Interest on short term borrowing Short term borrowing repaid Ending cash balance $ $ $ $ Minimum cash balance Cumulative surplus (deficit) $ $ $ $ Beginning short term investments $ $ $ $ Ending short term investments $ $ $ $ Beginning short term debt $ $ $ $ Ending short term debt $ $ $ $ b 2 What is the net cash cost (total interest paid minus total investment income earned) for the year (Do not round intermediate calculations Enter the answers in millions Round the final answers to 3 decimal places ) Net cash cost $

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Cottonwood Inc. had sales of $136 in Q4 of last year and has estimated sales (in millions) for the next four quarters as follows: Q1

Cottonwood Inc. had sales of $136 in Q4 of last year and has estimated sales (in millions) for the next four quarters as follows:

	Q1		Q2		Q3		Q4
Sales	$	160	$	175	$	190	$	215

Sales for the first quarter of the year after this one are projected at $170 million. Accounts receivable at the beginning of the year were $68 million. Cottonwood has a 45-day collection period.

Cottonwoods purchases from suppliers in a quarter are equal to 45% of the next quarters forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 25% of sales. Interest and dividends are $12 million per quarter.

Cottonwood plans a major capital outlay in the second quarter of $75 million. Finally, the company started the year with a $49 million cash balance and wishes to maintain a $30 million minimum balance.

a. Complete the following cash budget for Cottonwood. (Negative answers should be indicated by a minus sign. Enter the answers in millions. Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit "$" sign in your response.)

COTTONWOOD INC. Cash Budget (in $ millions)
	Q1	Q2	Q3	Q4
Beginning cash balance	$49.00	$	$	$
Net cash inflow
Ending cash balance	$	$	$	$
Minimum cash balance	30.00	30.00	30.00	30.00
Cumulative surplus (deficit)	$	$	$	$

Assume that Cottonwood can borrow any needed funds on a short-term basis at a rate of 3% per quarter and can invest any excess funds in short-term marketable securities at a rate of 2% per quarter.

b-1. Complete the following short-term financial plan for Cottonwood Inc. (Enter the answers in millions. Negative answers should be indicated by a minus sign. Do not leave any empty spaces; input a 0 wherever it is required. Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit "$" sign in your response.)

COTTONWOOD INC. Short-Term Financial Plan (in $ millions)
	Q1	Q2	Q3	Q4
Beginning cash balance	$30.00	$30.00	$30.00	$30.00
Net cash inflow
New short-term investments
Income from short-term investments
Short-term investments sold
New short-term borrowing
Interest on short-term borrowing
Short-term borrowing repaid
Ending cash balance	$	$	$	$
Minimum cash balance
Cumulative surplus (deficit)	$	$	$	$
Beginning short-term investments	$	$	$	$
Ending short-term investments	$	$	$	$
Beginning short-term debt	$	$	$	$
Ending short-term debt	$	$	$	$

b-2. What is the net cash cost (total interest paid minus total investment income earned) for the year? (Do not round intermediate calculations. Enter the answers in millions. Round the final answers to 3 decimal places.)

Net cash cost $