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Calculate the firm expected ending cash balance

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Reference no: EM132703218

Question - 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

Month 3 - Receipts: 22700, Payments: 21600

Month 4 - Receipts: 29100, Payments: 24300

Month 5 - Receipts: 32500, Payments: 26700

Month 6 - Receipts: 26000, Payments: 27200

Required -

A. Calculate the firm's expected ending cash balance.

B. 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.

C. 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.

Reference no: EM132703218

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