Diemans Corp The Cash Balance on April 1 Is $12,000

question 100

Multiple Choice

Diemans Corp. has provided a part of its budget for the 2^nd quarter: $\begin{array}{|l|r|r|r|} \hline& {\text { Apr }} &{\text { May }} &{\text { June }} \\\hline \text { Cash collections } & \$ 40,000 & \$ 45,000 & \$ 52,000 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of inventory } & 4,500 & 7,200 & 4,500 \\\hline \text { Operating expenses } & 7,900 & 5,600 & 9,000 \\\hline \text { Capital expenditures } & 0 & 20,000 & 4,600 \\\hline\end{array}$ 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 April.

• A) $50,000
• B) $40,200
• C) $39,600
• D) $51,800

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

Payback Period

The time it takes for an investment or project to generate cash flow or profits sufficient to cover the initial outlay or cost.

Scrap Value

The estimated value that an asset will realize upon its sale at the end of its useful life.

Net Operating Income

The income generated from a company's everyday business operations, excluding taxes and interest.