How low would interest rates need to fall

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Reference no: EM131787577

Question: Wisconsin Snowmobile Corp. is considering a switch to level production. Cost efficiencies would occur under level production, and after tax costs would decline by $30,000, but inventory costs would increase by $250,000. Wisconsin Snowmobile would have to finance the extra inventory at a cost of 13.5 percent.

a. 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?

Reference no: EM131787577

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