Diemans Corp -Refer to the Table Above,The Cash Balance on April 1

question 89

Multiple Choice

Diemans Corp. has provided a part of its budget for the 2^nd quarter: $$\begin{array} { | l | r | r | r | } \hline & { \text { Apr } } & { \text { May } } & { \text { June } } \\\hline \text { Cash collections } & \$ 40,000 & \$ 45,000 & \$ 52,000 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of inventory } & 4,500 & 7,200 & 4,500 \\\hline \text { Operating expenses } & 7,900 & 5,600 & 9,000 \\\hline \text { Capital expenditures } & 0 & 20,000 & 4,600 \\\hline\end{array}$$
-Refer to the table above,The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the cash balance at the end of May.

• A) $51,800
• B) $40,800
• C) $33,900
• D) $21,800

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Definitions:

Net Present Value

The gap between cash inflows' present value and cash outflows' present value during a certain period.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded over time for a fixed asset, reflecting its decrease in value.

Income Tax Rate

The percentage at which an individual or corporation is taxed. The tax rate may increase as taxable income increases (progressive tax rates).

Profitability Index

A financial metric used to assess the desirability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.