Reference no: EM132526006
Problem 1 - Cash Budget
Pratt Company expects to have a cash balance of $52,000 on January 1, 2020. Here is the monthly budget data for the first two months of 2020.
1. Collections from customers: January, $ 75,000; February, $149,000.
2. Payments to suppliers: January, $42,000; February, $79,000.
3. Wages: January, $35,000; February, $42,000. Wages are paid in the month they are incurred.
4. Administrative expenses: January, $27,000, February, $31,000. These costs include depreciation of $1,000 per month. All other costs are paid as incurred.
5. Selling expenses: January, $17,000, February, $21,000. These costs are exclusive of depreciation. They are paid as incurred.
6. Sales of short-term investments in January are expected to realize $14,000 in cash. Pratt has a line of credit at a local bank that enables it to borrow up to $30,000. The company wants to maintain a minimum monthly cash balance of $25,000.
Required - Provide a cash budget for January and February.
Problem 2 - Capital Budgeting
The McMahon Depot Co. is currently considering the purchase of a new machine that would increase the speed of manufacturing electronic equipment and save money. The net cost of the new machine is $ 70,000. The cash flows have the following projections:
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Year
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Amount
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1
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$24,000
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2
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31,000
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3
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41,000
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4
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22,000
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5
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13,000
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Required - If the cost of capital is 10 percent, find the following:
A. Payback Period.
B. Net Present Value
C. Internal Rate of Return
D. Profitability Index.
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Information pertaining to bacillus cells
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Provide a cash budget for january and february
: Pratt Company expects to have a cash balance of $52,000 on January 1, 2020. Provide a cash budget for January and February
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