Cash budget for June 2017 to October 2017. Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

Question

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Answer 1

Question

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

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Answer 2

Question

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

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Answer 3

Question

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

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Answer 4

Question

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

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Answer 5

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

Answer 6

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

Answer 7

Chapter 4, Problem 2P

a.

Summary Introduction

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

Answer 8

a.

Expert Solution

Explanation of Solution

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 1

Loan outstanding shall be repaid by cash available over and above the minimum requirement of $25,000 which are required to be maintained.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

Answer 13

b.

Summary Introduction

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

Answer 14

b.

Expert Solution

Answer to Problem 2P

B’s view regarding the rising interest cost when the payment is made to supplier in the same month is correct, however, it is not feasible because the discount forgone is greater than rise in interest rate.

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

Explanation of Solution

Calculation of total interest cost under different scenarios.

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 2

It can be observed from above calculations that the cost of interest rises when payment is made in the same month, interest cost is lowest in the month when all the payments for procurement are made in the next month.

B’s view correct, however, it is not feasible to implement the same because in order to gain benefit of lower interest rate, discount of 2 % offered by the suppliers is forgone.

Total discount forgone under different option is :

EBK FINANCIAL ANALYSIS WITH MICROSOFT E, Chapter 4, Problem 2P , additional homework tip 3

Answer 19

Ch. 4 - Prob. 2P Ch. 4 - Prob. 3P Ch. 4 - Prob. 4P

Cash budget for June 2017 to October 2017. Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

Concept explainers

Videos

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

Explanation of Solution

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

Answer to Problem 2P

Explanation of Solution

Want to see more full solutions like this?

Chapter 4 Solutions

Cash budget for June 2017 to October 2017. Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

Concept explainers

Videos

To calculate: Cash budget for June 2017 to October 2017. Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

Explanation of Solution

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view. Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.

Answer to Problem 2P

Explanation of Solution

Want to see more full solutions like this?

Chapter 4 Solutions

To calculate: Cash budget for June 2017 to October 2017.

Introduction: Cash budgets are prepared to plan cash availability for smooth maintenance of company’s operations, they shall account for all cash in-flows and cash out-flows.

To create:A scenario summary with total interest cost for differing the payment to suppliers at different rateswith comment on B’s view.

Introduction: When payment to suppliers is differed to next month, it results in savings in form of interest costs, as the working capital requirement falls.