Part 1 (12%) Explain the three reasons a company may need to borrow money. Be very detailed such as changes in specific current assets or liabilities or capital investment impact cash needs. Part 2 Total points 70% of assignment. Individual values for calculations are percent of 70%. Look at class notes. Three ways to finance current assets. a) Fixed assets and permanent current assets finance using a fixed rate note. Seasonal current assets finance are financed with short term borrowing ( in this problem lines of credit). b) All fixed and net current assets are finance by fixed rate note. Excess funds are reinvested at short term rate 2.0% C) Fixed assets, permanent current assets and some of the seasonal current assets are financed using a fixed rate note, with the balance funded by the line of credit. (Reminder if the line of credit is fully repaid and still have extra money, the extra money is invested at 2%/4 per quarter. Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Minimum Cash $500 $500 $500 $500 $500 Accounts Receivable $3,273 $1,200 $600 $600 $3,600 Inventory $300 $950 $2,900 $4,850 $300 Accounts Payable -$477 -$525 -$525 -$525 -$525 Net Working capital $3,596 $2,125 $3,475 $5,425 $3,875 NWC Finance fixed rate Temporary finance with line of credit Excess money invested at 2%