Here Are Some Important Figures from the Budget of Nashville

question 12

Multiple Choice

Here are some important figures from the budget of Nashville Nougats,Inc.,for the second quarter of 2012: $$\begin{array} { l r r r } & \underline { \text { April } } & \underline { \text { May } } & { \underline { \text { June } } } \\\text { Credit sales } & \$ 547,200 & \$ 570,240 & \$ 630,720 \\\text { Credit purchases } & 211,680 & 252,720 & 288,710 \\\text { Cash disbursements } & & & \\\text { Wages, other expenses } & 57,240 & 69,420 & 72,430 \\\text { Interest } & 16,410 & 16,410 & 16,410 \\\text { Equipment purchases } & 119,520 & 131,040 & 0\end{array}$$ The company predicts that 3 percent of its credit sales will never be collected,36 percent of its sales will be collected in the month of sale,and the remaining 61 percent will be collected in the following month.Credit purchases will be paid in the month following the purchase. In March 2012,credit sales were $302,400,and credit purchases were $224,640.The April 1 cash balance was $403,200.What is the cash balance at the end of May?

• A)$348,887
• B)$366,846
• C)$414,141
• D)$457,777
• E)$477,374

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Definitions:

Treasury Bills

Government-issued securities sold below their nominal value, with maturity periods of no more than a year.

Cost of Equity

is the return that investors expect for investing in a company's equity, reflecting the compensation for the risk undertaken.

Market Value

The ongoing rate at which one can buy or sell a service or asset in an unregulated market.

Cost of Equity

The rate of return required by a company's shareholders for investing in the company, representing the compensation for the risk undertaken.