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Here is a forecast of sales by National Bromide for the first four months of 2013 (figures in $ thousands): Cash sales Sales on credit Month 1 15 100 Month 2 24 120 Month 3 18 90 Month 4 14 70 On the average 50% of credit sales are paid for in the current month, 30% are paid in the next month, and the remainder are paid in the month after that. What is the expected cash inflow from operations in months 3 and 4? (Enter your answers in thousands.) Month 3 Month 4 Expected Cash Inflow from Operations $ $ 2. Indicate whether the following statements are true or false. a. Financial planning should attempt to minimize risk. False True b. The primary aim of financial planning is to obtain better forecasts of future cash flows and earnings. True False c. Financial planning is necessary because financing and investment decisions interact and should not be made independently. False True d. Firms' planning horizons rarely exceed three years. True False e. Financial planning requires accurate forecasting. True False f. Financial planning models should include as much detail as possible. True False 3. In fiscal 2010 and 2011 Caterpillar's financial statements included the following items. Inventory Receivables Payables Sales Cost of goods sold $ Millions 2010 2011 $ 9,587 $14,544 16,899 18,149 5,856 8,161 42,588 60,138 28,779 40,831 What was Caterpillar's cash conversion cycle? (Do not round intermediate calculations. Round your answer to the nearest day.) days Cash conversion cycle 4. Company X sells on a 1/30, net 60 basis. Customer Y buys goods invoiced at $1,000. a. How much can Y deduct from the bill if Y pays on day 30? (Round your answer to the nearest dollar amount.) Amount deducted $ b. What is the effective annual rate of interest if Y pays on the due date rather than on day 30? (Do not round intermediate calculations. Round your answer to 1 decimal place.) % Effective compound annual rate c. How would you expect payment terms to change if (i) The goods are perishable. (Click to select) (ii) The goods are not rapidly resold. (Click to select) (iii) The goods are sold to high-risk firms. (Click to select) 5. The Branding Iron Company sells its irons for $50 apiece wholesale. Production cost is $40 per iron. There is a 25% chance that wholesaler Q will go bankrupt within the next year. Q orders 1,000 irons and asks for six months' credit. Assume that the discount rate is 10% per year, there is no chance of a repeat order, and Q will pay either in full or not at all. a. Calculate the NPV of the order. (Negative amount should be indicated by minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) NPV of the order b. Should you accept the order? Yes No $ per iron