At the beginning of the year, you have an outstanding short-term loan of $10 which was used to cover your cash needs for the previous year. During the current year, you expect to pay $2 interest
And have an annual net cash inﬂow of - $10 (negative), excluding the interest payment. What is your
Anticipated loan balance at year end?

Question

Quizplus · Accepted Answer

The initial loan is $10. With a net cash outflow of $10 and an interest payment of $2, the total cash needed is $12. Adding this to the initial loan results in a year-end loan balance of $22.

At the Beginning of the Year, You Have an Outstanding