^ Referring to this short-term financial plan, how is "New short-term investment" and "Short term investment" income derived? (part b) I have attached the answer to part a and b for your reference, looking forward to hearing from you soon! :)

Calculating the Cash Budget [LO3] Wildcat, Inc., has estimated sales in mil-lions) for the next four quarters as follows: Q1 Q2 Q3 Q4 Sales $160 $175 $190 $215 Sales for the first quarter of the year after this one are projected at $170 million counts receivable at the beginning of the year were $68 million. Wildcat has a 4 collection period. Wildcat's purchases from suppliers in a quarter are equal to 45 percent of the quarter's forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, other expenses run about 25 percent of sales. Interest and dividends are $12 per quarter. Wildcat plans a major capital outlay in the second quarter of $75 million. Finally, the company started the year with a $49 million cash balance and wishes to maim a $30 million minimum balance. a. Complete a cash budget for Wildcat by filling in the following: WILDCAT, INC. Cash Budget in millions) Q1 $49 Q2 Q3 04 Beginning balance Net cash inflow Ending cash balance Minimum cash balance Cumulative surplus (deficit) 30 b. Assume that Wildcat can borrow any needed funds on a short-tam basis at era of 3 percent per quarter and can invest any excess funds in short-term marketable securities at a rate of 2 percent per quarter. Prepare a short-term financial p by filling in the following schedule. What is the net cash cost (total interest minus total investment income earned) for the year? Q2 Q3 Q4 WILDCAT, INC. Short-Term Financial Plan in millions) Q1 Target cash balance $30 Net cash inflow New short-term investments Income from short-term Investments Short-term investments sold New short-term borrowing Interest on short-term borrowing Short-term borrowing repaid Ending cash balance Minimum cash balance Cumulative surplus (deficit) 30 Beginning short-term investments Ending short-term Investments Beginning short-term debt Ending short-term debt = Chapter 18. Problem 15QP 1 Bookmark Show all steps: ON The following table is prepared to determine the net cash inflow. Quarter 1 Quarter 2 Quarter 3 Quarter 4 Beginning receivables $68.00 $80.00 $87.50 $95.00 Sales 160.00 175.00 190.00 215.00 Collection of accounts 148.00 167.50 182.50 202.50 Ending receivables $80.00 $87.50 $95.00 $107.50 Payment of accounts $76.05 $82.80 $92.25 $84.60 Wages, taxes, and expenses 40.00 43.75 47.50 53.75 Capital expenditures 0 75.00 0 0 Interest and dividends 12.00 12.00 12.00 12.00 Total cash disbursements $128.05 $213.55 $151.75 $150.35 Total cash collections $148.00 $167.50 $182.50 $202.50 Total cash disbursements 128.05 213.55 151.75 150.35 Net cash inflow $19.95 $46.05 $30.75 $52.15 Comment Step 4 of 6 A Prepare cash budget for four quarters. Particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4 $49.00 Opening cash balance $68.95 $22.90 $63.65 $53.65 Add: Nel cash intlow 19.95 -46.05 30.75 52.15 Ending cash balance $68.95 $22.90 $53.65 $105.80 Less: Minimum cash balance -30.00 -30.00 -30.00 -30.00 Cumulative surplus (deficit) $38.95 $7.10 $23.65 $75.80 Note: Take net cash inflow from step 1. - Ending cash balance of previous year is beginning cash balance of current year. b. Prepare short-term financial plan. Quarter 1 Quarter 2 Quarter 3 Quarter 4 Target cash balance $30.00 $30.00 $30.00 $30.00 Net cash inflow 19.95 -46.05 30.75 52.15 New short-term investments -20.33 o -24.64 -52.64 Short-term investments Income .38 .79 0 .49 Sale of Short-term investments 0 39.33 0 0 New short-term borrowing 0 5.93 0 0 Short-term borrowing interest 0 0 -12 0 Short-term borrowing repaid 0 0 -5.93 0 Ending cash balance $30.00 $30.00 $30.00 $30.00 Minimum cash balance -30.00 -30.00 -30.00 -30.00 Cumulative surplus or (deficit) $0 $0 $0 $0 Beginning short-term investments $19.00 $39.33 $0 $24.64 Ending short-term investments $39.33 $0 $24.64 $77.28 Beginning short-term debt $0 SO $5.93 $0 Ending short-term debt $0 $5.93 $0 $0