We have inserted the symbol E* (for Excel) to the left of each problem or part w

Question

We have inserted the symbol E* (for Excel) to the left of each problem or part where Excel should be used. An asterisk on the problem number indicates that at least a partial answer is given in the back of the book. E*4.1. Consider the Everglade cash flow problem discussed in this chapter. Suppose that extra cash is kept in an interest- bearing savings account. Assume that any cash left at the end of a year earns 3 percent interest the following year. Make any necessary modifications to the spreadsheet and re-solve.

Explanation / Answer

Projected net cash flow for the Everglade Golden years Company over the next ten years LT Rate 5% ST Rate 7% (All amount in millions) Start Balance 1 Minimum Cash 0.5 Cash LT Loan ST Loan LT ST LT ST Ending Minimum Year Flow Interest Interest Payback Payback Balance Balance 2014 -8 6 1.5 0.5 ? 0.5 2015 -2 3.5 0.3 0.105 -1.5 0.905 ? 0.5 2016 -4 7 0.3 0.245 -3.5 0.95 ? 0.5 2017 3 3 0.3 0.49 -7 0.74 ? 0.5 2018 6 0.3 0.21 -3 4.25 ? 0.5 2019 3 0.3 0 0 7.55 ? 0.5 2020 -4 0.3 0 0 3.85 ? 0.5 2021 7 0 0 0 10.85 ? 0.5 2022 -2 0.3 0 0 9.15 ? 0.5 2023 10 0.3 0 0 19.45 ? 0.5 2024 0.3 0 -6 0 13.75 ? 0.5

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