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Wildcat, Inc., has estimated sales (in millions) for the next four quarters as follows: Q1 Q2 Q3 Q4 Sales $ 120 $ 140 $ 160 $ 190 Sales for the first quarter of the year after this one are projected at $135 million. Accounts receivable at the beginning of the year were $53 million. Wildcat has a 45-day collection period. Wildcat’s purchases from suppliers in a quarter are equal to 40 percent of the next quarter’s 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 $72 million. Finally, the company started the year with a cash balance of $69 million and wishes to maintain a $30 million minimum balance. a. Complete the following cash budget for Wildcat, Inc. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Do not round intermediate calculations and round your final answers to 2 decimal places, e.g., 32.16.) WILDCAT, INC. Cash Budget (in millions) Q1 Q2 Q3 Q4 Beginning cash balance $ 69.00 $ $ $ Net cash inflow Ending cash balance $ $ $ $ Minimum cash balance –30.00 –30.00 –30.00 –30.00 Cumulative surplus (deficit) $ $ $ $ Assume that Wildcat 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. b-1. Complete the following short-term financial plan for Wildcat, Inc. (Enter your answers in millions. Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations and round your final answers to 2 decimal places, e.g., 32.16.) 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 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 $ $ $ $ b-2. What is the net cash cost (total interest paid minus total investment income earned) for the year? (Enter your answers in millions. Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Net cash cost
Lennon Inc., is considering a new project whose data is as follows: Sales revenues: $22,750, Depreciation: $9,000, Other operating costs: $13,500, and a tax rate of 45%. What is the project's Year 1 cash flow to the nearest dollar?
A firm can make any form of distribution to its shareholders using the free cash flow tht it generates. The underlying objective is to maximize shareholder wealth by increasing the firm's value. Invest in business facility improvement. Pay interest e..
What is the project net cash flow (OCF) for year 2 and what is the book value at the end of year 3 - What is the discounted payback for this project - Construct income statement and what best describes operating profit margin.
Future value of an annuity Your client is 20 years old; and she wants to begin saving for retirement, with the first payment to come one year from now. She can save $8,000 per year; and you advise her to invest it in the stock market, which you expec..
Capital Healthplans Inc. is evaluating two different methods for providing home health services to its members. Both methods involve contracting out for services, and the health outcomes and revenues are not affected by the method chosen. What is eac..
Ratio analysis involves analyzing financial statements in order to appraise a firm's financial position and strength. A stock with a beta equal to -1.0 has zero systematic (or market) risk.
If you buy a 7-year, risk-free, zero coupon bond with a yield-to-maturity of 4%, then sell it 3 years later, when the yield-to-maturity on 4-year, risk-free, zero coupon bonds is 5%, what is your annual HPR? (Assume annual compounding.)
Why is it important to use market-based weights rather than balance sheet weights when estimating a company's weighted average cost of capital?
Develop a spreadsheet for opening a UPS store franchise that forecasts profits, revenues, and costs using the cost model. Be sure to include all assumptions that you made as you developed your forecasts. In addition, you should include a breakdown of..
Ruth Hornsby is looking to invest in a three-year bond that makes semiannual coupon payments at a rate of 5.625 percent. If these bonds have a market price of $980.13, what yield to maturity and effective annual yield can she expect to earn?
What is the role of the Congressional Budget Office (CBO)? - Why is independence and impartiality important when conducting empirical analyses?
An investor is considering purchasing a bond with a 6.6% coupon interest rate, a par value of $1000. , and a market price of 1079.36.. the bond will mature in 9 years... What is the bonds current yield What is the bonds approximate yield to maturity ..
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