1. Tree Top Toys needs to finance their new production facility for spyglasses. The cost is $12 million.
They expect to payout $6 million or 40% of their net cash flow. Any external financing will be raised 80% borrowings and the remainder equity.
Unfortunately, the company has no internal excess short-term funds to use.
How much total equity cash flow will be used?
A. $0.6million.
B. $2.4 million.
C. $9.0 million.
D. $9.6 million.
E. $3.0 million.
2. Cost-Volume-Profit Analysis assumptions include which of the following:
a. Costs can be accurately separated into their variable and fixed components.
b. Both unit variable costs and total fixed costs remain constant.
c. Neither unit variable costs nor total fixed costs remain constant.
d. A and B are correct
e. A and C are correct