Project A and B for your company differ in how they affect firm leverage (amount of debt a firm uses to finance assets). How should this affect other decisions made by your firm, such as capital structure decisions?

Example of Project A and B:

EXHIBIT 4.8 Capital Budgeting Alternatives for Next Quarter Unit Overhead Unit Labor Life Cost Capacity Saving Sav. Qtr. 2 Change/Qtr. Labor Sav. A B 2 yrs. 3 yrs. $659,280 $513,342 100,000 120,000 $15,340 -$8,102 $0.82 $0.85 $0.03 -$0.01 EXHIBIT 4.8 Capital Budgeting Alternatives for Next Quarter Unit Overhead Unit Labor Life Cost Capacity Saving Sav. Qtr. 2 Change/Qtr. Labor Sav. A B 2 yrs. 3 yrs. $659,280 $513,342 100,000 120,000 $15,340 -$8,102 $0.82 $0.85 $0.03 -$0.01