A rights offering Question 16 options: a) is the least expensive way to raise capital. b) gives the firm a built-in market for new securities. c) will increase the shareholder's total valuation. d) will likely lead to considerably higher distribution costs.

Wisconsin snowmobile corp. is considering a switch to level production. cost efficiencies would occur under level production, and after tax costs would decline by $36,000, but inventory would increase by $300,000. wisconsin snowmobile would have to finance the extra inventory at a cost of 13.5 percent. a. determine the extra cost or savings of switching over to level production. should the company go ahead and switch to level production? b how low would interest rates need to fall before level production would be feasible?