Your firm has a net cash inflow for the quarter of -$25 (negative).The beginning cash balance is $15.Company policy is to maintain a minimum cash balance of $10 and borrow only the amount that is necessary to maintain that balance.How much does your firm need to borrow to have a zero cumulative surplus?

Question

Quizplus · Accepted Answer

Starting with a cash balance of $15, the company has a net cash inflow of -$25, which means they ended up with $15 - $25 = -$10. Since the company policy is to maintain a minimum cash balance of $10, they need to borrow just enough to reach that minimum balance.

Therefore, the amount they need to borrow is $10 (minimum balance) - (-$10) (ending balance) = $20.

Option C is the closest choice to this answer, as it is the only option greater than $15 but less than $30.

Your Firm Has a Net Cash Inflow for the Quarter