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Sep Tomo, Inc. has prepared its third quarter budget and provided the following data: Jul Aug Cash collections $50,000 $40,000 $47,200 Cash payments: Purchases of
Sep Tomo, Inc. has prepared its third quarter budget and provided the following data: Jul Aug Cash collections $50,000 $40,000 $47,200 Cash payments: Purchases of direct materials 30,000 21,200 18,000 Operating expenses 12,500 9,100 11,600 Capital expenditures 13,400 24,700 0 The cash balance on June 30 is projected to be $4,400. 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 August taking into consideration all the financing transactions. O A. $8467 OB. $48500 O C. $15000 OD. $ -6533
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