Toni's has a net cash inflow,excluding long-term financing expenses,for the quarter of $418.02.The beginning cash balance is $187.40.The firm has $546 in short-term debt with a quarterly interest rate of 1.2 percent.New company policy is to maintain a minimum cash balance of $140.How much does the firm need to borrow or how much can it repay on its loan to have a zero cumulative surplus for the quarter?

Question

Quizplus · Accepted Answer

Quarterly interest payable = 0.012 × $546 = $6.55
Cumulative surplus = $187.40 + $418.02 − $6.55 − $140 = $458.87
The firm can repay $458.87 on its short-term debt.

Toni's Has a Net Cash Inflow,excluding Long-Term Financing Expenses,for the Quarter