Question

During September, the capital expenditure budget indicates a $470000 purchase of equipment. The ending September cash balance from operations is budgeted to be $62000. The company wants to maintain a minimum cash balance of $30000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?

$408000

$378000

$500000

$440000

Answer 1

Calculation of minimum loan to be borrowed :-

Particulars	amount ($)
Loan to be Borrowed (balancing figure)	438000
Less :- budget capital expenditure	(470000)
Add :- budgeted ending cash balance from operations	62000
Closing balance of cash	30000

Here we can do reverse calculations.

The answer is $440000.

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