AAA Company Is Preparing Its 3rd Quarter Budget and Provides

question 11

Multiple Choice

AAA Company is preparing its 3rd quarter budget and provides the following data: Cash balance at June 30 is projected to be $4,000. The company is required 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 pays interest monthly at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. Loan balance should be repaid in increments of $5,000 when there is surplus cash.
How much cash shortfall will the company have at the end of July, before financing?

• A)$2,000
• B)$6,500
• C)$5,000
• D)$1,250

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Definitions:

Diffusion

The mechanism through which an inventive idea is transmitted over time through selected routes among members of a societal system.

Complex Innovations

Advanced, intricate changes or improvements in processes, products, or systems that often require significant understanding and adaptation.

Diffusion

The method whereby a new idea is spread via specific pathways over a period among individuals within a social network.

Trialability

Refers to the extent to which an innovation can be tested or experimented with on a limited basis before making a full-scale adoption decision.