Paymore Products places orders for goods equal to 75% of itssales forecast in the next quarter which has been provided in thebelow table.
| Quarter in Coming Year | | Following Year |
| First | Second | Third | Fourth | | First Quarter |
| Sales forecast | $388 | $360 | $342 | $390 | | $390 |
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Paymore’s labor and administrative expenses are $71 per quarterand interest on long-term debt is $46 per quarter. Paymore’s cashbalance at the start of the first quarter is $40 and its minimumacceptable cash balance is $30. Assume that Paymore can borrow upto $342 from a line of credit at an interest rate of 2% perquarter. On average, one-third of sales are collected in thequarter that they are sold, and two-thirds are collected in thefollowing quarter. Assume that sales in the last quarter of theprevious year were $342. Also, one third of the orders are paid forin the current month and then two thirds of the next quarter'sorders are paid in advance. Prepare a short-term financing planusing the above table. (Leave no cells blank. Enter '0'when necessary. Negative amounts should be indicated by a minussign. Do not round intermediate calculations. Enter your answers inmillions of dollars rounded to 2 decimal places.)
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| | Quarter | | (figures in $ millions) | First | Second | Third | Fourth | | A. Cash requirements | | | | | | Cash required for operations | | | | | | Interest on bank loan | | | | | | Total cash required | $0.00 | $0.00 | $0.00 | $0.00 | | B. Cash raised in quarter | | | | | | Line of credit | | | | | | Total cash raised | $0.00 | $0.00 | $0.00 | $0.00 | | C. Repayments of bank loan | $0.00 | | $0.00 | $0.00 | | D. Addition to cash balances | | | | | | E. Line of credit | | | | | | Beginning of quarter | | | | | | End of quarter | 0.00 | 0.00 | 0.00 | 0.00 |
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