Big Chuck wishes to maintain a $10,000 minimum cash balance at all times. Additional financing is available (and retired) in $1,000 multiples at a 12 percent interest rate. Suppose that borrowings take place at the starting of the month; retirements, in contrast, occur at the end of the month. Interest is paid at time of repaying principal and computed on portion of principal repaid.
a. Evaluate the unknowns in Big Chuck's abbreviated cash budget.
b. Evaluate the outstanding loan balance as of September 30, after any repayments have been made.