he cash budget is considered the primary forecasting tool when firms try to estimate their cash flows and figure out if they are likely to need dditional cash flows or to generate surplus cash. 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 coliection of recelvables. The soles and cash collection estimates are shown in the following table (in millions of dollars): You also have the following information about Mooney Equipmont: - In sny given period, Mooner's purchases from suppliers generally account for 78% of the expected saies in the next period, and wages, supplies, and taxes are expected to be 15% of next periods salos. - In the third quarter, Mooney expects to expand one of its plants, which will require an additional $1,078 million investment. - Every quarter, Mooney pars $55 million in interest and divideod 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. - In the third quarter, Mooney expects to expand one of its plants, which will require an additional $1,078 million investment. - Every quarter, Mooney pays $55 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. sing the precoding information, answer the following questions: (Note: Round your answers to the nearest millionth dollar.) - What is the net cash inflow that Mooney expects in the fourth quarter (Q4) ? - If Mooney is beginning this year with a cash balance of $39 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)? - 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? Thue 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. True. False The cash budget is considered the primary forecasting tool when firms try to estimate their cash flows and figure out if they are likely to need additional cash flows or to generate surplus cash. 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): You also have the following information abouthooney Equipment: - In any given period, Mooney's purchases from suppliers generally account for 78% 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 wall require an additional $1,078 million invertment. - Every quarter, Mooney pays 355 million in interest and dividend payments to long-term deot and equity investors. - Mooney prefers to keep o minimum target cash balance of at least $16 million at ail times. Using the preceding information, answer the following quespons: (Note: Round your answars to che nearest millionth dollar.) - What is the net cash inflow that Mooney expocts in the fourth quarter (Q4))? - If Moonoy is beginning this year with a cash balance of $39 million and expects to maintain a minimum target cash balanct of at least $16 million, what will be lits likely cash