Your fiRm Has a Net Cash Inflow for the Quarter

question 339

Multiple Choice

Your firm has a net cash inflow for the quarter of $60. The beginning cash balance is $35. Company policy is to maintain a minimum cash balance of $15 and borrow only the amount that is necessary
To maintain that balance. How much does your firm need to borrow or how much can it repay on its
Loans to have a zero cumulative surplus?

• A) Borrow $40.
• B) Borrow $10.
• C) Repay $10.
• D) Repay $40.
• E) Repay $80.

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Definitions:

Consuming

The act of using up goods and services to satisfy wants or needs.

Maximizing Utility

The process of choosing the allocation of scarce resources that provides the highest possible satisfaction or happiness to an individual or society.

Marginal Utility

The change in overall satisfaction or utility obtained by consuming one additional unit of a good or service.

Total Utility

The total satisfaction received from consuming a particular quantity of goods and services.