Burchfield,Inc The Cash Balance on June 30 Is Projected to Be

question 48

Multiple Choice

Burchfield,Inc.has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } & { \text { Aug } } & { \text { Sep } } \\\hline \text { Cash collections } & \$ 51,000 & \$ 39,700 & \$ 47,900 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of direct materials } & 30,000 & 21,900 & 17,000 \\\hline \text { Operating expenses } & 12,200 & 8100 & 11,300 \\\hline \text { Capital expenditures } & 13,400 & 24,700 & 0 \\\hline\end{array}$$ The cash balance on June 30 is projected to be $4500.The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls.It may borrow in increments of $5,000 and has to pay interest every month at an annual rate of 4%.All financing transactions are assumed to take place at the end of the month.The loan balance should be repaid in increments of $5,000 whenever there is surplus cash.Calculate the amount of principal repayment at the end of September.

• A) $5,000
• B) $10,000
• C) $15,000
• D) $20,000

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Definitions:

Real GDP

The total value of all goods and services produced within a country, adjusted for inflation, reflecting the real quantity of goods and services.

Real GDP Per Capita

Real GDP divided by the population; the best measure of an economy’s standard of living.

U.S. Job Market

The labor market in the United States, encompassing the supply of labor and demand for workers.

Average Education

The mean level of formal schooling completed by a population, often used as an indicator of human capital in economic studies.