Assume that you are finance director at Straightline Medical. Straightline’s director of operations is considering purchasing a Fanuq Robodrill and robotic operator for integration into our assembly lines. This will be used in medical machining, which is CNC machining related to surgical implants, orthotic devices and medical instruments, which we manufacture. Because these new medical devices are developed quickly and refined through many iterations, efficient small-batch machining is almost exclusively outsourced, currently. The director of operations believes that the incorporation of this technology ‘in-house’ will make Straightline substantially more competitive, by reducing production costs – raising the profit margin on our devices. Nevertheless, as finance director, you are aware that the market for both debt and equity instruments may not be favorable if the firm should need substantial external financing, as it seeks to acquire the drill and robotic operator. With this in mind, you intend to analyze features of debt and equity instruments as these will impact the firm’s financing decision as the firm moves forward with adoption of this costly technology, and present your evaluation of financial risks to a group of directors including the firm’s director of operations. You plan to outline the consequences that technology acquisition could have, in the event that inflation drives interest rates up over the period in which the firm will be obtaining needed financing, and in the event that revenues fluctuate or fall below expectations. While you understand that the project will not be considered unless it yields positive net present value to the firm, you are concerned about meeting repayment obligations, and you are concerned that the cost of financing may exceed original estimates. Given that the degree of external financing needed is substantial, you feel that management should be aware of these possibilities.
For the attached two responses to the background and dilemma (attached file scenarios) offering critical analyses and comments relating to their determinations and evaluations of Straightline’s dilemma for each scenario separately (Brian and Nicole) . Please cite sources of additional research, and examine areas where you do and do not believe that your classmates’ statements make optimal use of assigned readings, or could otherwise include additional considerations.
Ensure each response is separate and consists of 200–600 words.
