The following is the sales budget (in millions) for Cottonwood Inc. for the next four quarters:

	Q1	Q2	Q3	Q4
Sales	$	190		$	210		$	230		$	260

Sales for the first quarter of the year after this one are projected at $205 million. Accounts receivable at the beginning of the year were $70 million. Cottonwood has a 45-day collection period.

Cottonwood's purchases from suppliers in a quarter are equal to 50 percent of the next quarter's forecast sales, and suppliers are normally paid in 36 days. Wages, taxes, and other expenses run about 20 percent of sales. Interest and dividends are $18 million per quarter.

Cottonwood plans a major capital outlay in the second quarter of $94 million. Finally, the company started the year with a $83 million cash balance and wishes to maintain a $30 million minimum balance.

Complete a cash budget for Cottonwood by filling in the following:

COTTONWOOD, INC.
Cash Budget
(in $ millions)
	Q1	Q2	Q3	Q4
Beginning Cash Balance
Net Cash Inflow
Ending Cash Balance
Minimum Cash Balance
Cumulative Surplus (Deficit)

Assume that Cottonwood can borrow any needed funds on a short-term basis at a rate 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 plan by filing in the following schedule. What is the net cash cost (total interest paid minus total investment income earned) for the year?

COTTONWOOD, INC.
Short-Term Financial Plan
(in $ millions)
	Q1	Q2	Q3	Q4
Beginning 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	-30
Cumulative surplus (deficit)
Beginning short-term investments
Ending short-term investments
Beginning short-term debt
Ending short-term debt