$1,000

$400

$700

Nothing at all

Metal X should increase their short-term borrowings.

Metal X may have solvency problems, that is problems paying their bills if and when they fall due because they may have to pay bills before they receive cash from their customers.

Metal X’s management can slow down their decision-making process because turnover has slowed down.

6.0%

12.0%

9.6%

8.4%

Dividends are tax deductible for shareholders.

Dividends are paid from retained earnings.

Dividends are tax deductible for the entities paying them.

Shareholders receiving dividends do not need to include them in their taxable income.

Dividends must be paid regularly every year and have priority over interest payments.

Maximize their debt financing to minimize possible losses to their shareholders.

Maximize their debt financing to minimize the income tax their pay.

Finance themselves by using a lower Debt/Equity ratio to ensure their solvency and ability to pay their debts if and when they fall due.

Finance themselves using short term loans so they have flexibility.

Choose one financial metric (e.g., IRR) and base the decision on its value

Use Net Present Value (NPV) to compare different projects

Calculate and compare multiple indicators to make a well-rounded decision

Select the project with the shortest payback period