Nagaya Company is an investment group which has projected the following capital requirements for the next 12 months as follows;
|
Month
|
Amount
|
Month
|
Amount
|
|
sh.000
|
|
sh.000
|
|
Jan
|
2,800
|
Jul
|
16,800
|
|
Feb
|
2,800
|
Aug
|
19,400
|
|
Mar
|
4,200
|
Sep
|
12,600
|
|
Apr
|
5,600
|
Oct
|
7,000
|
|
May
|
8,400
|
Nov
|
5,600
|
|
Jun
|
12,600
|
Dec
|
4,200
|
The cost of shorter and long-term funds per annum is projected at 20% and 25% respectively during the same period.
Required.
1. Prepare a schedule showing the amount of permanent and seasonal funds requirement each month.
2. What is the average amount of long-term and short-term financing that will be required each month?
3. Calculate the total cost of working capital financing if the firm adopts
An aggressive financing strategy.
A conservative financing strategy.