CASH BUDGET
Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:
MonthSales Revenue
January $300,000
February 250,000
March 200,000
April 150,000
All sales are on credit: 60 percent is collected during the month of sale, and 40 percent is collected during the next month.
Cost of goods sold is 80 percent of sales. Payments for merchandise sold are made in the month following the month of
sale. Operating expenses total $42,000 per month and are paid during the month incurred. The cash balance on February 1
is estimated to be $30,000.
Required:
Prepare monthly cash budgets for February, March, and April.
(Do so on separate sheet or sheets of paper via Word document or Excel spreadsheet.)
EQUAL ANNUAL NET CASH INFLOWS
Snow Devil Company is evaluating a capital expenditure proposal that requires an initial investment of $32,312, has predicted cash inflows of $8,000 per year for seven years, and has no salvage value.
Required: (Do so on separate sheet or sheets of paper via Word document or Excel spreadsheet.)
1. Using a discountrate of 10 percent, determine the net present value of the investment proposal.
2. Determine the proposal's internal rate of return. (Refer to Appendix 24B in the textbook if you use the table approach.)