Question

During September, the capital expenditure budget indicates a $400000 purchase of equipment. The ending September cash balance from operations is budgeted to be $56000. The company wants to maintain a minimum cash balance of $25000. What is the minimum cash loan that must be planned to be borrowed from the bank during September?

Answer 1

the minimum cash loan borrowed is $369,000

Step-by-step explanation:

The computation of the minimum cash loan borrowed is given below:

= Purchase value of an equipment - cash balance budgeted for september month + minimum cash balance

= $400,000 - $56,000 + $25,000

= $369,000

hence, the minimum cash loan borrowed is $369,000