Uncle's Caps, a Merchandiser, Has Provided the Following Budgeted Amounts

question 6

Multiple Choice

Uncle's Caps, a merchandiser, has provided the following budgeted amounts for the next budget period. A minimum cash balance of $250,000 is required to be maintained. The company can borrow in increments of $10,000 as and when required. Assume the company can borrow the needed funds at the end of the period. Calculate the ending cash balance for the budget period.

• A)$320,300
• B)$250,600
• C)$300,000
• D)$540,230

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Definitions:

Risk Premium

The extra return or compensation investors demand for taking a higher risk compared to a risk-free investment.

Systematic Risk

The risk associated with the overall market or a specific segment of it that cannot be reduced through diversification.

Dividend

A portion of a company's earnings distributed to its shareholders, typically paid on a regular basis.

One-Year Return

The total percentage gain or loss on an investment over a one-year period, taking into account both price fluctuations and dividends or interest received.