Cash flows
Is is typical for Jane to plan, monitor, an assess her financial position using cash flows over a given period, typically a month. Jane has a savings account, and her bank loans money at 6 percent per year while it offers short-term investment rates of 5 percent. Jane's cash flows during August were as follows:
Item Cash inflow Cash outflow
Clothes -$1,000
Interest received $ 450
Dining out -$500
Groceries -$800
Salary $4,500
Auto payment -$355
Utilities -$280
Mortgage -$1,200
Gas -$222
a. Determine Jane's total cash inflows and cash outflows.
b. Determine the net cash flow for the month of August.
c. If there is a shortage, what are a few options open to Jane?
d. If there is a surplus, what would be a prudent strategy for her to follow?