Dynamic Futon forecasts the following purchases from suppliers:

Dynamic Futon forecasts the following purchases from suppliers:

	Jan.	Feb.	Mar.	Apr.	May.	Jun.
Value of goods ($ millions)	32	28	25	22	20	20

a. Forty percent of goods are supplied cash-on-delivery. The remainder are paid with an average delay of one month. If Dynamic Futon starts the year with payables of $22 million, what is the forecasted level of payables for each month?

b. Suppose that from the start of the year the company stretches payables by paying 40% after one month and 20% after two months. (The remainder continue to be paid cash on delivery.) Recalculate payables for each month assuming that there are no cash penalties for late payment.