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them as if you were the CFO of each company

Finance Nov 17, 2022

them as if you were the CFO of each company. There is not one absolute correct answer, but some answers should be obviously incorrect. You won your first contract to build parts for a Boeing commercial aircraft that will increase your sales by 40 million dollars per year for the 5 years of the contract. Your current corporate sales are 80 million dollars per year and your net profit margin is 15% After 5 years Boing will stop production of that particular model and you may not receive any other orders from Boeing. You will have to buy new equipment to fabricate the part. The equipment will cost 20 million dollars and have a life of ten years. You estimate the equipment can be sold at the end of the contract for 5 million dollars. Yourtotal asset turnover before this contract win has been 1.5 to 1. Assuming your debt to equity ratio is such that you can carry the 20 million debt without stressing the balance sheet, and you actually decide to finance the new equipment with debt, describe how you would raise 20 million dollars in the debt market.

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