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I'm having trouble understanding so if you could show your work that would help me tremendously. Thank you so much! Answer the following questions based
I'm having trouble understanding so if you could show your work that would help me tremendously. Thank you so much!
Answer the following questions based on the company information given below. Company Information: Pro Sporting Goods is creating a separate division to manufacture basketballs under a private label for a major retail chain. The retail chain has guaranteed an order of 5,000 basketballs per month during the first year and will pay $10 per basketball. The retailer will pay for its purchases in 60 days. The basketballs cost Pro Sporting Goods $4.50 to manufacture. The operating expenses of the new division are expected to be $5,500 per month, and the division's profits are subject to a 21% corporate tax rate (paid monthly). The division is going to begin operations on January 1, 2019. 1. Prepare profit and loss statements for January, February, and March 2019. 2. What are the division's cumulative net profits for the first three months of operation? January February March 4. What is the division's cumulative cash flow for the first three months of operation? January February March 5. How much cash does Pro Sporting Goods need to have on hand to start this division? Explain how you came up with this amount. Answer: 6. Explain why tracking monthly cumulative cash flow gives a better estimate of how much funds are needed than quarter total. Answer: 7. Identify one additional question, other than funding, that you might be concerned with as a manufacturer before starting this division? Explain your reasoning. Answer: 8. Name two potential options for obtaining the necessary funds for the new division. Answer: Funding option 1: Funding option 2 Step by Step Solution
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