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Growth and Cash Suppose you project the following, which assumes flat sales and inventory. Month 0 Month 1 Month 2 Debt 34.400 33.824 33.242 Accounts

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Growth and Cash Suppose you project the following, which assumes flat sales and inventory. Month 0 Month 1 Month 2 Debt 34.400 33.824 33.242 Accounts Payable 0 8,897 8,897 Accounts Receivable 0 6,944 6,944 Inventory 4.100 4,100 4,100 Net PP&E 5,880 5.810 5.740 Net Income 0 1.128 1,132 Stockholder's Equity 54,600 Dividends None Month 3 32.655 8,897 6,944 4,100 5.670 1.135 Month 4 32,063 8.897 6,944 4.100 5,600 1.138 Please compute how much Cash you would have in month 4. What would happen if units sold (and inventory) increased? Debt Accounts Payable Accounts Receivable Inventory Net PP&E Net Income Stockholder's Equity Dividends Month 34.400 0 0 4.100 5,880 0 54,600 None Month 1 33.824 16,933 6.944 15.580 5,810 1.128 Month 2 33,242 20,951 10.080 27.060 5.740 2.392 Month 3 32,655 24.969 13,216 38.540 5.670 3,655 Month 4 32,063 28.987 16,352 50.020 5,600 4,918 Observe what happened to your cash account. With the growth in sales and inventory, what has happened to cash Please look at month 4--how much would it drop? A Between 2.000 and 25,000 B Between 25.000 and 28,500 C Between 28.500 and 33,000 D Between 33.000 and 40.000

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