Please see attached files and answer associated questions.
The following scenario contains all the information you need to answer the questions— use what’s here, do not include additional analysis from the case or elsewhere tocomplete your answers. Your company has $10,000,000 in “excess cash” — more than you need to provide acushion on your balance sheet to protect against risk. Jane, your crack financialanalyst, has prepared a set of options for you to consider. They are: A) Keep the $10,000,000 on the balance sheet and earn a 3.0% after—tax return fromthe bank for the next 15 years. B) One of your bondholders has offered to sell you back $10,000,000 of youroutstanding 12% notes, which would enable you to forego this year’s interestpayments plus the next 15 years, at which point the bond will mature. Assume a taxrate of 35%. 0) Expand your plant by 165,000 units per shift; Jane says that you can expect an$11 after—tax contribution margin per unit and that you can run this new portion of theplant for 2 shifts for the next 15 years, at which point the equipment will need to bescrapped. D) Spend the $10,000,000 this year and another $10,000,000 next year on inventingthe CPRA product. Jane says you will yield zero incremental after-tax contributionmargin the following year, but $2.5m the year after that, $5m the year after that, and$10m per year thereafter until year 15, at which point Jane says it’s reasonable toassume that the CPRA product will have been supplanted by other technologies. Jane has prepared a worksheet where she has laid out for you the cash flowsassociated with these decisions from the shareholders’ oersoeofive.
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