- Sales in the past two months (November and December) were $500 and $450, respectively. For January, February, and March, you forecast sales of $285, $600, and $410, respectively. Based on past years? experience, you expect to collect 20% of sales in cash, 50% after 30 days (i.e., in the month following the sale), and 30% two months after the sale. In January, you expect to receive a tax refund of $120. In February, you plan to sell an obsolete production machine for $85. Cash outflows for January, February, and March are expected to be $556, $364, and $565, respectively. The firm?s target cash balance is $35. Cash on hand at the beginning of January is $50. Construct a cash budget for January-March and answer the following four questions:
- Will the firm need to borrow?
- When will the first borrowing occur?
- What will be the maximum total loan?
- Will?the?firm?repay?the?loan?(and?be?out?of?debt)?during?the?budget?period?
- Please give me a breakdown leading up to the answer.