1

1. Durango Mountain Bike Tours’ ending cash balance as of December 31. 2020 was

Highlights $10,000, Its expected cash collections and payments for the next six months are

given in the following table.

=

Flashcards

& [Month | Collections | Payments

Copied January $18,563 $21,825

Content February 30,881 35,100

March 51,075 48,600

31,844 60,344

109,688 30,113

141,750 107,100

a. Calculate the firm's expected ending cash balance for each month.

b. Assuming that the firm must maintain an ending cash balance of at least

$12.000, how much must they borrow during each month?

c. Tf the firm must pay 5° annual interest on its short-term borrowing. what are

the ending cash balances for each month?

qd. What are the ending cash balances if the firm uses any cash in excess of the

minimum to pay off its short-term borrowing in each month?