A large pharmaceutical company just purchased manufacturing equipment to enhance its production

process. The company's treasurer wants to prepare a cash budget to ensure that the purchase installments

are paid at the right time. The first quarterly installment of $$80,000$ is due at the end of August. The sales

forecast for June, July, August, and September are $$40,000,$$$50,000,$$$35,000,$ and $$50,000,$ respectively. The

treasurer has recorded that $20\%$ of the total sales are cash sales paid in the same month, $65\%$ of the

customers pay in the month following the sales, and $15\%$ of the customers pay two months after the sales.

The payment for $70\%$ of the purchases is made after one month of the purchase, and the payment for $30\%$ of

the purchases is made after two months of the purchase. Purchases are assumed to be $60\%$ of the following

month's sales. The beginning balance of cash in June is $$25,000.$ The sales for April and May are $$40,000$ and

$$45,000,$ respectively.

If the company has a policy of maintaining a minimum cash balance of $$10,000,$ how should it pay its first

quarterly installment at the end of August?

Less

The company should pay $$69,700$ of the installment amount from its net

cash inflow and borrow $$10,300$ to pay the balance installment amount.

The company should pay $$56,900$ of the installment amount from its net

cash inflow and borrow $$23,100$ to pay the balance installment amount.

The company should pay $$80,000$ of the installment amount from its net

cash inflow and borrow $$0$ to pay the balance installment amount.

The company should pay $$70,400$ of the installment amount from its net

cash inflow and borrow $$9,600$ to pay the balance installment amount.