Question 180265This question is from textbook Foundations of Finance
: Please explain how to work this formula.
A company collects 60% of its sales during the month of sale, 30% one month after the sale & 10% two months after the sale. Expected sales are: $10,000 in August, $20,000 in September, $30,000 in October, & $40,000 in November. How much cash is expectedn to be collected in October.
I came up with $25,000 however, I'd feel better if I knew the actual formula to work simular problems.
This question is from textbook Foundations of Finance
Answer by Mathtut(3670)   (Show Source):
You can put this solution on YOUR website! You are correct. Lets call m the given month. I think a possiblem way to think of this is in any given month you are collecting (.6m +.3(m-1)+.1(m-2)).
:
so no matter what month your talking about say april .6(april)+.3(march)+.1(feb)
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