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Running Head: PROBLEM SET ONE

Problem Set One

University of Phoenix

MMPBL 503

Instructor: Christopher Kubik

March 23, 2009

Chapter 4 Problem 20

Monthly Cash Receipts

Monthly Cash payments

Monthly Cash Flow

Cash Budget with Borrowing and Repayment

Chapter 5 Problem 2

$30,000 is the break-even point in units, BE=FC/P-VC FC=15,000, P=$8, VC=$7.50

$50,000 is the sales in units needed to earn a profit of $25,000

Chapter 7 Problem 3

$6 million has been freed up by the cash management system, 2 is the number of days that the collection time has been reduced by, and 3 is the number of days that the disbursement time has increased by. Add the days then multiply by the average cash movement per day. 3 days times 2 million, the average cash movement per day equals $6 million that has been freed up.

$720,000 is the amount that City Farm can earn in dollars per year on short term investments made possible by freed up cash. The answer is found by multiplying the amount freed up, which is $6 million by 12% because excess funds are being invested in short term instruments yielding 12% per annum.

Chapter 7 Problem 20

$15,000 is the average receivable balance, average receivable is equal to the daily credit sales times the 30 day term, 500 x 30 days = $15,000. 12 is the receivable turnover, receivable turnover is equal to annual credit sales divided by average accounts receivable. The annual credit sales are $180,000 and the average account receivable is $15,000.