A services firm does all its business in cash only. The firm projects a cash balance of $3 000 in its account after all taxes and costs are paid. The owners plan to invest $8 000 and pay a dividend of $1 000. How much net new financing is needed?
A)$4 000
B)$7 000
C)$6 000
D)$5 000

Question

Quizplus · Accepted Answer

The firm needs a total of $9,000 ($8,000 for investment and $1,000 for dividends) but only has $3,000 available. Therefore, it needs an additional $6,000 in financing.

A Services Firm Does All Its Business in Cash Only