AAA Company Is Preparing Its 3rd Quarter Budget and Provides

question 36

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 will the company have to borrow at the end of August?

• A)$0
• B)$5,000
• C)$10.000
• D)$15,000

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Definitions:

Sample Mean

The average value of a sample set, calculated by summing all observations and dividing by the number of observations.

T-Score

A standardized score that indicates how many standard deviations an element is from the mean.

Confidence Estimate

A range of values used to estimate a parameter, calculated in such a way that it is likely, to a specified level of confidence, to contain the true value of the parameter.

Confidence Interval

A set of values, calculated from sample statistics, predicted to hold the value of an unobserved population parameter.