Malachi,Inc The Cash Balance on June 30 Is Projected to Be

Malachi,Inc.has prepared its third quarter budget and provided the following data: $$\begin{array} { | l | r | r | r | } \hline & { \text { Jul } } & { \text { Aug } } &{ \text { Sep } } \\\hline \text { Cash collections } & \$ 51,000 & \$ 39,500 & \$ 46,600 \\\hline \text { Cash payments: } & & & \\\hline \text { Purchases of direct materials } & 31,000 & 21,500 & 17,000 \\\hline \text { Operating expenses } & 12,000 & 9000 & 11,300 \\\hline \text { Capital expenditures } & 13,500 & 24,600 & 0 \\\hline\end{array}$$ The cash balance on June 30 is projected to be $4500.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 4%.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 September.

A) $21,584
B) $6584
C) $8367
D) $54,967

Correct Answer:

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