Dynamic Mattress decides to lease its new mattress-stuffing machines rather than buy them. As a result, capital expenditure in the first quarter is reduced by $30 million, but the company must make lease payments of $1.5 million for each of the four quarters. Assume that the lease has no effect on tax payments until after the fourth quarter. Construct two tables like Tables 30.8 and 30.9 showing Dynamic?s cumulative financing requirement and a new financing plan.

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Third Fourth First Second Quarter Quarter Quarter Quarter Sources of cash: Collections on accounts receivable 85 128 80.3 108.5 Other 12.5 Total sources 85 80.3 121 128 Uses of cash: Payments on accounts payable Labor, administrative, and other expenses Capital expenditures Taxes, interest, and dividends Total uses 65 60 55 50 30 30 30 30 32.5 1.3 5.5 4 4.5 131.5 95.3 95 93 -46.5 Sources minus uses -15.0 +26 +35 Calculation of short-term financing requirement: 1. Cash at start of period 2. Change in cash balance (sources less uses) 3. Cash at end of period* 1+ 2 = 3 4. Minimum operating cash balance 5. Cumulative short-term financing required* 5 = 4 - 3 -30.5 5 -41.5 -56.5 -46.5 -15.0 +26 +35 -30.5 -41.5 -56.5 +4.5 46.5 35.5 61.5 .5 Second Quarter Third Quarter Fourth First Quarter Quarter New borrowing: 1. Bank loan 38.0 0.0 0.0 0.0 2. Stretching payables 3. Total 3.5 19.7 19.7 0.0 0.0 0.0 0.0 41.5 Repayments: 4. Bank loan 0.0 0.0 4.3 33.7 5. Stretching payables 6. Total 0.0 3.5 19.7 0.0 33.7 0.0 3.5 24.0 7. Net new borrowing 41.5 16.2 -24.0 -33.7 8. Plus securities sold 5.0 0.0 0.0 0.0 9. Less securities bought 0.0 0.0 0.0 0.4 10. Total cash raised 46.5 16.2 -24.0 -34.1 Interest payments* 11. Bank loan 0.0 0.8 1.0 1.0 12. Stretching payables 13. Interest on securities soldt 0.0 0.2 1.0 0.0 0.0 0.1 0.1 0.1 14. Net interest paid 15. Cash required for operationst 0.0 1.2 2.0 0.9 46.5 15.0 -26.0 -35.0 16. Total cash required 46.5 16.2 -24.0 -34.1