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During September, the capital expenditure budget indicates a $420,000 purchase of equipment. The ending September cash balance from operations is budgeted to be $60,000. The company wants to maintain a minimum cash balance of $30,000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?

a, $330,000
b, $360,000
c, $450,000
d, $390,000

Respuesta :

Answer:

d, $390,000

Explanation:

In order to maintain minimum balance as provided, the company will have to take cash loan,

Cash generated from operations provided = $60,000

Budgeted purchase of equipment = $420,000

Minimum cash balance required at month end = $30,000

Therefore loan to be taken = Cost of equipment + Minimum balance - Cash generated from operating activities

= $420,000 + $30,000 - $60,000 = $390,000

Thus, correct option is

d, $390,000

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