Wildcat, Incorporated, has estimated sales (in millions) for the
next four quarters as follows:

Q1 
Q2 
Q3 
Q4 
Sales 
$ 130 
$ 150 
$ 170 
$ 200 
Sales for the first quarter of the following year are projected
at $145 million. Accounts receivable at the beginning of the year
were $57 million. Wildcat has a 45day collection period.

Wildcat’s purchases from suppliers in a quarter are equal to 50
percent of the next quarter’s forecast sales, and suppliers are
normally paid in 36 days. Wages, taxes, and other expenses run
about 20 percent of sales. Interest and dividends are $10 million
per quarter.

Wildcat plans a major capital outlay in the second quarter of
$68 million. Finally, the company started the year with a $71
million cash balance and wishes to maintain a $40 million minimum
balance.

a1. 
Assume that Wildcat can borrow any needed funds on a shortterm
basis at a rate of 3 percent per quarter and can invest any excess
funds in shortterm marketable securities at a rate of 2 percent
per quarter. Complete the following shortterm financial plan for
Wildcat. (Enter your answers in millions. Negative
amounts should be indicated by a minus sign. Leave no cells blank –
be certain to enter “0” wherever required. Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)

a2. 
What is the net cash cost for the year under this target cash
balance? (A negative answer should be indicated by a
minus sign. Enter your answer in millions. Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)

b1. 
Complete the following shortterm financial plan assuming that
Wildcat maintains a minimum cash balance of $20
million. (Enter your answers in millions. Negative
amounts should be indicated by a minus sign. Leave no cells blank –
be certain to enter “0” wherever required. Do not round
intermediate calculations and round your answers to 2 decimal
places, e.g., 32.16.)

b2. 
What is the net cash cost for the year under this target cash
balance? (Enter your answer in millions. Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
