Acme, Inc has prepared its third quarter budget and provided the following data
Jul Aug Sep
Cash collections $50,000 $39,600 $46,100
Cash payments:
Purchases of direct materials 30,000 21,700 17,600
Operating expenses 12,300 8,000 11,600
Capital expenditures 13,700 24,300 0
The cash balance on June 30 is projected to be $4,100. 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. How much will the company have to borrow at the end of July?
A) $0
B) $5,000
C) $15,000
D) $10,000
D .
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