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Holiday Tree Farm has a cash balance of $34 and a short-term loan balance of $180...

Holiday Tree Farm has a cash balance of $34 and a short-term loan balance of $180 at the beginning of Q1. The net cash inflow for the first quarter is $36 and for the second quarter there is a net cash outflow of $48. All cash shortfalls are funded with short-term debt. The firm pays 2 percent of its prior quarter's ending loan balance as interest each quarter. The minimum cash balance is $20. What is the short-term loan balance at the end of Q2?

Multiple Choice

  • $184.3

  • $193.1

  • $128.4

  • $138.6

  • $179.2

  • Which statement is true?

    Multiple Choice

  • The number of days in the cash cycle can be positive, negative, or equal to zero.

  • Paying a supplier within the discount period rather than waiting until the end of the normal credit period will decrease the cash cycle.

  • An increase in the inventory turnover rate must increase the cash cycle.

  • The payables period must be shorter than the receivables period.

  • A decrease in the accounts receivable turnover rate decreases the cash cycle.

Solutions

Expert Solution

jeff jeffy answered 5 months ago
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