At the beginning of the year, you have an outstanding short-term loan of $684 which was used to cover your cash needs for the previous year. During the current year, you expect to pay $34 in
Interest. The projected net cash ﬂow for the year is $403, excluding the interest payment. What is
Your anticipated loan balance at year end?

Question

Quizplus · Accepted Answer

The anticipated loan balance at year end is calculated by subtracting the net cash flow and interest payment from the initial loan balance: $684 - $403 - $34 = $247. However, since the net cash flow is not enough to cover the entire loan and interest, the remaining balance is $684 - $403 = $281. Adding the interest of $34 gives $315.

At the Beginning of the Year, You Have an Outstanding