In this scenario, Finance is facing a negative cash position. Currently the department is both issuing and retiring $6,000 of long-term debt. Use the slidersbelow to reassess the company's financing decisions and protect against an Emergency Loan.Task QuestionYou have invested $6,000 in plant improvementsand financed $6,000 Long-Term debt to pay for it.You have also elected to retire $6,000 of Long-Term Debt. Now, your closing cash position reads-$3,000.RetireLongTerm Debt $0IssueLongTerm Debt $0$3,600$6,000$10,000$10,000Closing Cash Position ($5,400)Hint SubmitTotal Raised Capital: $6,000Spence0Starting Cash PositionJanuary 1, 2019Cash FlowCash from OperatingCash from InvestingCash from Financing. Dividends Paid• Issue Stock. Retire Stock.Net Change in Cument Debt• Issue Long-Term Debt. Retire Long-Term DebtClosing Cash PositionDecember 31, 2019Total Spent Capital: $6,000$3,431($6,431)$0SO$0$0$0$0$6,000($6,000)($3,000)KClick to Expand✓Incorrect!The $6,000 Long-Term Debt you initially issuedwas a solid financial decision to pay foroperations (plant improvements). Borrowing anymore, or less is avoiding the real issue - it isgenerally bad practice to borrow and pay-back atthe same time. Try something else.

Lets understand the basics. Management calculate and manager cash position so that to there is no…

Answered: In this scenario, Finance is facing a…

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter21: Dynamic Capital Structures And Corporate Valuation

Section: Chapter Questions

Problem 5MC: David Lyons, CEO of Lyons Solar Technologies, is concerned about his firms level of debt financing....

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