McIntyre, Inc has prepared its third quarter budget and provided the following data
Jul Aug Sep
Cash collections $50,000 $39,900 $46,000
Cash payments:
Purchases of direct materials 31,000 22,000 17,500
Operating expenses 12,200 8,700 11,300
Capital expenditures 13,600 24,300 0
The cash balance on June 30 is projected to be $4,500. The company has 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 has to pay interest every month at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. The loan balance should be repaid in increments of $5,000 whenever there is surplus cash. Calculate the final projected cash balance at the end of August taking into consideration all the financing transactions.
A) $7,558
B) $(7,442 )
C) $47,600
D) $15,000
A .
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