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23 September, 15:17

A company has the following budgeted information: Cash receipts: $542,000; Beginning cash balance: $10,000; Cash payments (including interest payments) : $560,000; Outstanding loan balance: $100,000; Desired ending cash balance: $50,000. In order to maintain the desired cash balance, the company will need to:

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  1. 23 September, 19:07
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    In order to maintain the desired cash balance, the company will need to:

    The company needs to take a loan of $58,000, because the cash balance is - $8,000, and the company wants to keep a ending cash balance of $50,000

    Explanation:

    $10,000 Beginning Cash Balance

    $542,000 Cash Receipts

    -$560,000 Cash Payments

    -$8,000 Cash Balance

    $58,000 Loan to keep the desired ending balance.

    The Outstanding loan balance is not considered because it reflects the total Present Value of remaining loan installments.
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