Q1 Q2 Q3 Q4

Sales $160 $180 $200 $230

Sales for the first quarter of the year after this one are projected at $175 million. Accounts receivable at the beginning of the year were $69 million. Wildcat has a 45-day collection period.

Wildcats purchases from suppliers in a quarter are equal to 45 percent of the next quarters forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 25 percent of sales. Interest and dividends are $12 million per quarter.Wildcat plans a major capital outlay in the second quarter of $88 million. Finally, the company started the year with a $77 million cash balance and wishes to maintain a $30 million minimum balance.

a. Complete the following cash budget for Wildcat, Inc.

Target Cash balance,Net cash inflow, Ending cash balance, Minimum cash balance, and Cumulative surplus(deficit) for all 4 quarters. ($ in millions)

Given info: Q1 Target Balance: 77.00, Minimum cash balance for all 4 quarters= -30.00

Assume that Wildcat can borrow any needed funds on a short-term basis at a rate of 4 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 3 percent per quarter.

b-2. What is the net cash cost (total interest paid minus total investment income earned) for the year?

b-1. Complete the following short-term financial plan for Wildcat, Inc.

WILDCAT, INC. Short-Term Financial Plan in millions) Q1 Q2 Q3 Q4 Target cash balance 30.00 $ 30.00 $ 30.00 $ 30.00 Net cash inflow New short-term investments Income from short-term investments Short-term investments sold New short-term borrowing -30 -30 Interest on short-term borrowing Short-term borrowing repaid Ending cash balance Minimum cash balance Cumulative surplus (deficit) Beginning short-term investments Ending short-term investments Beginning short-term debt Ending short-term debt WILDCAT, INC. Short-Term Financial Plan in millions) Q1 Q2 Q3 Q4 Target cash balance 30.00 $ 30.00 $ 30.00 $ 30.00 Net cash inflow New short-term investments Income from short-term investments Short-term investments sold New short-term borrowing -30 -30 Interest on short-term borrowing Short-term borrowing repaid Ending cash balance Minimum cash balance Cumulative surplus (deficit) Beginning short-term investments Ending short-term investments Beginning short-term debt Ending short-term debt