Cash flows It is typical for Jane to plan, monitor, and assess her financial pos

Question

Cash flows It is typical for Jane to plan, monitor, and assess her financial position using cash flows over a given period, typically a month. Jane has a savings account and her bank loans money at 6% per year while it offers short-term investment rates of 5 %. Jane's cash flows during August were as follows

Item Cash inflow Cash outflow

Clothes 1,200

Interest recieved $430

Dinning Out $510

Groceries $ 760

Salary $4,500

Auto Payment $354

Utilities $270

Mortgage $1,290

Gas $ 223

a. Determine Jane's total cash inflows and cash outflows.
b. Determine the net cash flow for the month of August.
c. If there is a shortage, what are a few options open to Jane?
d. If there is a surplus, what would be a prudent strategy for her to follow?

Explanation / Answer

A) TOTAL CASH INFLOWS= 430+4500

=$4930

B) NET CAS FLOW=430+4500-1200-510-760-354-270-1290-223

=$323

C) IF THERE IS A SHORTAGE, JANE CAN TAKE LOAN FROM BANK AT AN INTEREST RATE OF 6% p.a.

D)IF THERE IS A SURPLUS, JANE CAN INVEST IN BANK AT AN INTEREST RATE OF 5% p.a.

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