company has obtained permission to place one of its machine in a local library . The company makes two types of machines . One distributes soft drinks , and the other distributes snack foods . AFDC expects both machines to provide benefits over a 8-year period , and each has a required investment of $ 2,990 . The firm uses a 9.8 % cost of capital . Management has constructed the following table of estimates of annual cash inflows for pessimistic ., most likely , and optimistic results .
8 ) Degree of operating leverage Grey Products has fixed operating costs of $ 382,000 , varaiable operating costs of $ 15.61 per unit , and selling price of $ 62.91 per unit .
9 ) Finding operating and free cash flows consider the balance sheets and selected data from the income statement of Keith Corporation .
10 ) Pro forma balance sheet – Basic Leonard Industries wishes to prepare a pro forma balance sheet for December 31,2016 . The firm expects 2016 sales to total $ 3,000,000 .
11 ) Aggressive versus conservative seasonal funding strategy Dynabase Tool has forecast its total funding requirements for the coming year .
12 ) Initiating a cash discount Gardner company currently makes all sales on credit and offers no cash discount . The firm is considering offering a 3 % cash discount for payment within 15 days . The firm ’ s current average collection period is 60 days , sales are 40,000 units , selling price is $ 46 per unit , and visible cost per unit is $ 30 . The firm expects that the change in credit terms will result in an increase in sales .
13 ) Degree of financial leverage North western Savings and Loan has a current capital structure consisting of $ 230,000 of 15 % ( annual interest )