1. Work out a short-term financing plan for Dynamic Mattress Company, assuming the limit on the line of credit is raised from $100 to $120 million. Otherwise keep to the assumptions used in developing.
2. Dynamic Mattress decides to lease its new mattress stuffing machines rather than buy them. As a result, capital expenditure in the first quarter is reduced by $50 million, but the company must make lease payments of $2.5 million for each of the four quarters. Assume that the lease has no effect on tax payments until after the fourth quarter. Construct two tables like Tables 29.5 and 29.6 showing Dynamic’s cumulative financing requirement and a new financing plan. Check your answer using the “live” spreadsheet on the book’s Web site, www.mhhe.com/bma .
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