J) For quarter 1, 5% of the outstanding loan is 250,000. For quarter 2, it turns out to be
187,500. Quarter 3 is 125,000. Finally, quarter 4 is 62,500. For the 1 , they would not
have 1,000,000 so they will not be able to meet this requirement for the life of a loan.
This only sums up to 849,162. So the second question discusses the necessity of having a
cash balance of 5% of the outstanding loan at the start of the following quarter and that
they will be able to meet this requirement so the answer is yes. I feel like the first
requirement is a more reasonable way to protect the risk to the bank because the
requirement to have a minimum of 1,000,000 appeals to the bank more. If the cash
balance is that high, then their assets are more liquid and thus, wont be at risk to the bank.
K) BuildIt company management can diminish the problem of budget padding by
avoiding reliance on the budget as a negative evaluation tool. For example, if the budget
director or some other top manager harasses a supervisor every time a budgetary cost
projection is exceeded, the likely behavioral response will be to pad the bud