It is typical for Jane to plan, monitor, and 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% per year while it offers short-term investment rates of 5%. Jane's cash flows during August were as follows:
|
Item Cash flow
|
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?