A construction company has the following cash flows projected: Month 1: -$50,000, Month 2: $25,000, Month 3: $75,000, Month 4: -$30,000. Starting with $40,000 cash, what is the cumulative cash position at the end of Month 3?
Correct Answer
D) $90,000
Starting cash: $40,000. Month 1: $40,000 - $50,000 = -$10,000. Month 2: -$10,000 + $25,000 = $15,000. Month 3: $15,000 + $75,000 = $90,000.
Why This Is the Correct Answer
Starting cash: $40,000. Month 1: $40,000 - $50,000 = -$10,000. Month 2: -$10,000 + $25,000 = $15,000. Month 3: $15,000 + $75,000 = $90,000.
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