A services firm does all its business in cash only.The firm projects a cash balance of of $2000 in its account after all taxes and costs are paid.The owners plan to invest $5000 and pay a dividend of $1000.How much net new financing is needed?
A)$4000
B)$5000
C)$6000
D)$7000
E)$8000

Question

Quizplus · Accepted Answer

The firm needs an additional $4000 in financing to cover the shortfall between its current cash balance plus the investment and the dividend payment.

A Services Firm Does All Its Business in Cash Only