A contractor expects to receive $400,000 in payments next month but must pay $520,000 in expenses. The current cash balance is $75,000. What action should the contractor take?
Correct Answer
B) Arrange for additional financing of at least $45,000
Projected cash shortage = $75,000 + $400,000 - $520,000 = -$45,000. The contractor needs at least $45,000 in additional financing to cover the shortfall.
Why This Is the Correct Answer
Projected cash shortage = $75,000 + $400,000 - $520,000 = -$45,000. The contractor needs at least $45,000 in additional financing to cover the shortfall.
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