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)