Cash flows: It is typical for Jane to plan, monitor and assess her financial position using cash flow over a given period, typically a month. Jane has a savings account and her bank loans money a 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
Interest received $440
Dining out 470
Auto payment 344
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?
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The solution provides step by step method for the calculation of total cash inflow, total cash outflow and net cash flow. Formula for the calculation and Interpretations of the results are also included.