The company wants to have a minimum of $50,000 cash balance at the end of each quarter.
Assume cash is borrowed at the beginning of a quarter and repaid at the end of a quarter. Simple Interest is based on 1% each month on outstanding borrowings. Beginning cash balance is $60,000. Cash borrowed is assumed to happen on the first day of a quarter and any payments are assumed to occur on the last day of a quarter. Interest is only paid on cash repayments.
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Quarter 1
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Quarter 2
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Quarter 3
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Quarter 4
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Total Year
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Cash Balance - Beginning
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60,000
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Total Cash Available
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450,000
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563,000
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858,000
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937,000
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2,809,600
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Total Cash Disbursements
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460,000
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563,000
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739,000
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760,000
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2,522,000
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Cash Flow - Excess (deficiency)
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Financing:
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Borrowings - Line of credit
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Repayments - Line of Credit
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Interest Paid - Line of Credit
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Total Financing
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Cash Balance - Ending
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Monthly Interest Rate
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1.00%
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