Baseball Card Land, Inc. sells baseball cards and other memorabilia. The company tries to maintain a cash balance equivalent to approximately 30 days of sales. Sales in 2006 amounted to $352,412 and the company expects growth in 2007 of 33% and in 2008 of 40%. Given the information provided about Baseball Card Land what is the company's 2007 projected year-end cash balance?

Question

Quizplus · Accepted Answer

To find the projected year-end cash balance for 2007, we need to first calculate the sales projections for 2007 and 2008:

- Sales in 2007: 33% growth from 2006 = $352,412 * 1.33 = $468,498
- Sales in 2008: 40% growth from 2007 = $468,498 * 1.4 = $655,897.20

Next, we need to find the cash balance equivalent to approximately 30 days of sales for each year:

- Cash balance for 2006: 30/365 * $352,412 = $28,965.48
- Cash balance for 2007: 30/365 * $468,498 = $38,524.11

Therefore, the projected year-end cash balance for 2007 is $38,524, which is option D.