Question

Just need help with the Short-Term Financial Plan. Everything above is correct. Please also show work so I can follow along. Thank you
Construct a short-term financial plan

Midwest Tire also maintains a minimum cash balance of $800. The ending cash balance is $800 this year. Suppose Midwest Tire can make short-term investments and obtain a quarterly return of 1% and can borrow short-term loan at the rate of 2% quarterly. In the end of this year, there is no balance on either the short-term investment or borrowing account. Also assume that the interest income or cost does not add to the value of the principal. Construct a short-term financial plan taking into account the opportunities to borrow and invest on a quarterly basis.

Chapter 18 - Midwest Tire Company Input Area 01 1550 S 1,600 prior Credit sales Credit purchases Cash disbursements 1,500 S 1,400 $ 1,700 $ Wages, taxes, and expenses Intcrest 180 80 168 80 204 80 186 80 AR at the beginning of the year 600 Collection Period Payable Period Collections from current period sales Collection from prior period sale Payables on current period purchases Payables on prior period purchases 60 60 33% 67% 33% 67% % of purchases for next Q sales Wages, tax, other as % of sales Interest & Dividend Minimum Cash Balance Borrowing rate Invested securities 75% 12% 80 800 2% 1%

Answer 1

	SHORT TERM FINANCIAL PLAN
		Q1	Q2	Q3	Q4
	Target/Beginning Cash Balance	$800	$800	$800	$800.00
	Net Cash Flow	($260)	$94	($22)	$209
	Short Term Investment:
	Interest Income	$0	$0	$0	$0
	New Investment	$0	$0	$0	$0
	Investment Sold	$0	$0	$0	$0
	Net cash flow-Investment	$0	$0	$0	$0
	Short termBorrowing
	Interest Cost	$0	$2.60	$1.69	$1.92
	New Borrowing	$260	$0	$23.69	$0
	Borrowing repaid	$0	$91.40	$0	$192.29
	Net Cash Flow-Borrowing	$260	($94.00)	$22	($194.21)
	Ending Cash Balance	$800	$800.00	$800.00	$814.79
	WORKSHEET FOR INVESTMENT
	Investment Beginning Balance	$0	$0	$0	$0
	Investment Ending Balance	$0	$0	$0	$0
	WORKSHEET FOR BORRWING
	Borrowing Beginning Balance	$0	$260	$168.60	$192.29
	Borrowing Ending Balance	$260	$168.60	$192.29	$0