Reference no: EM132668916

The closing cash balance of a company at the end of a financial year was $10000.The projected receipts and operating payments for the next six months are given below:

Month 1 - Receipts: 16500, Payments: 19400
Month 2 - Receipts: 18300, Payments: 20800
Month3 - Receipts: 22700, Payments: 21600
Month4 - Receipts: 29100, Payments: 24300
Month5 - Receipts: 32500, Payments: 26700
Month 6 - Receipts: 26000, Payments: 27200

Problem 1: Calculate the firm's expected ending cash balance

Problem 2: If the company should maintain a minimum balance of $9000 and difference is funded through a borrowing how does the borrowing change? Assume loans are not paid.

Problem 3: If surplus beyond minimum cash balance is used for repayments and interest payments are settled as the loan is repaid show revised cash balances after repayment assuming interest is paid @ 5% per annum. Assume part payment of loan is not allowed and loans inflows happen on the first day of the month and repayments on the last day of the month.