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Drilling Down: Expanding CNC

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This discussion addresses the following Module Outcomes:

Analyze features of debt and equity instruments as they affect a firm’s financing decisions. (CO2, CO3, CO4)

Assess the effect that a term structure of interest rates has on bond yields. (CO3)

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Analyze determinants of bonds yields and pricing. (CO3)

Investigate the Fisher Effect in relation to managerial decision-making. (CO2, CO3, CO4)

Straightline Medical produces linear bearings that are essential components of the rotary drives within a variety of medical devices and machines. Production of linear bearings requires high levels of repeatable precision. Straightline is considering the purchase of a Fanuq Robodrill in conjunction with a Robotic operator. The Fanuq Robodrill is a fully-fledged compact Computer Numerical Control (CNC) milling, tapping, and drilling center that delivers unrivalled quality and precision (Fanuc Corporation, 2016; Thomas Publishing Company, 2016). Proven to be extremely robust and reliable, it offers the shortest cycle times for most milling and drilling tasks. Together with a robotic operator, this device will be integrated into existing CNC systems, which offer component designs for the larger-scale manufacturing processes. CNC results in highly automated manufacturing components which use computer-aided design (CAD) and computer-aided manufacturing (CAM) programs. The programs produce a computer file that is interpreted to extract the commands needed to operate a particular machine by use of a post processor, and then loaded into the CNC machines for production. Since any particular component might require the use of a number of different tools – drills, saws, etc., – the machines are often combined into a single ‘cell’ operated by an external controller and human or robotic operators that move the component from machine to machine. The series of steps needed to produce any part is highly automated, and produces a part that closely matches the original CAD design. ReferencesFanuc Corporation. (2016). ROBODRILL – product – FAQ

 (Links to an external site.)

.  Thomas Publishing Company. (2016). 

 (Links to an external site.)

About CNC machining

 (Links to an external site.)


Discussion Prompt

In this discussion, 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.


Assume that you are addressing a group of directors including the firm’s director of operations. Speaking as the finance director of Straightline Medical, plan to evaluate alternative methods of financing, including debt and equity instruments, on the purchase of a Robodrill in conjunction with a Robotic operator for expansion of production of components of the rotary drives within a variety of our medical devices and machines. Also, plan to provide a recommendation for the best financial tool to facilitate adoption of this technology:

While minimizing the impact of this major technology acquisition financing decisions on other areas of operations, through the diversion of existing resources, and considering variability in revenues.

In light of effect of inflation on financing costs when choosing among financing strategies (stocks, bonds or loans), as you believe it will affect this decision.

Post two additional replies to classmates, offering critical analyses and comments relating to their determinations and evaluations of Straightline’s dilemma. 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.

Responses should comprise 200–600 words.

Consult the Discussion Posting Guide for information about writing your discussion posts. It is recommended that your write your post in a document first. Check your work and correct any spelling or grammatical errors. When you are ready to make your initial post, click on the “Reply”. Then copy/paste the text into the message field, and click “Post Reply.” 

To respond to a peer, click “Reply” beneath her or his post and continue as with an initial post.


This discussion will be graded using the discussion board rubric. Please review this rubric, located on the Rubrics page within the Start Here module of the course, prior to beginning your work to ensure your participation meets the criteria in place for this discussion. All discussions combined are worth 20% of your final course grade.

Discussion: Motivational Strategy

One of the hopes of an effective motivational strategy is to increase the productivity and performance of its employees and ensure employees are satisfied in their jobs. Job satisfaction, then, is an outgrowth of a motivated workforce. In this discussion, we will examine the intricacies of keeping employees happy.

Initial Post

What makes a “satisfied” employee? How much control, or influence, does an organization have to create and maintain the “satisfied” employee? Then, research and discuss 1 strategy a leader can adapt to ensure better its employees are satisfied. In other words, how can a leader make an “unsatisfied” employee more “satisfied?”

Post your initial response by Wednesday, 11:59 pm ET.

Response Post

Now that you’ve identified a strategy a leader can adopt to improve employee satisfaction, discuss with your peers how leaders can measure the effectiveness of their strategy. Again, remember to read through your peers’ posts and discuss with a minimum of two peers. Your response is due by Sunday, 11:59 pm ET.

Student 1

For this project we are looking at three options for financing the in-house purchase of the company Fanuq Robodrill. These options are to sell stock, sell bonds, or to get a loan. The first option to sell stock has advantages and disadvantages. The most obvious is that it will generate cash and help to alleviate the debt of the purchase without taking on any additional debt, however, the disadvantage to this method is that it will take shares away from the business and if low enough could remove the majority from the business. This would cause issues with the running of the business and the new shareholders expect a return on their investment in the company. If you get a bond then you get an interest only loan that is expected to be paid at the end. This comes as an advantage of raising the money initially for a low amount of money that will need to be fronted and paid over the course of the years. However, at the end of the loan period the principal is due in its entirety. This disadvantage would be dramatic when it comes due and will need to be accounted for. Finally, the last option is to get a loan from a financial institution. To pay the debt of purchasing the company this will come with a major disadvantage of the payment of interest and principal will cause a large payment and large amount of debt due to another company. If the loan defaults, then the debt will be placed against the business and could cost a large amount in bankruptcy or the loss of the business itself. (Ross, 2019) 

It is my recommendation to seek a bond to pay for this financial endeavor. This is because the disadvantages are the least and will result in achieving the money with the least amount of yearly and monthly payments. The end principal payment can be debited as a prepaid amount for the business and can be budgeted for after you see the prosperity of the new machines and how it affects the business. This method will cost the business the least in stocks or debt and will still give the money for the acquisition. (Ross, 2019). 




Ross, Stephen. Financial Management. McGraw Hill Education, 2019, Excelsior College, https://prod.reader-ui.prod.mheducation.com/epub/sn_4275/data-uuid-70e0adb87d0a473a95b1457ac5eefbd7, Accessed 2022.

Student 2

Straightline Medical Director of Operations and other Directors,

Thank you for your time reviewing this, as your Finance Director purchasing the Robodrill and hiring a Robodrill operator is a large investment within Straightline Medical. This purchase requires immediate resources and increased liabilities to meet the eventual end state of producing these inhouse. The inhouse production will not only meet our patients needs quicker; providing them a better service, but we will also be more competitive within the market, reduce outsourcing costs, and we will eventually raise our profit margins. I say eventually raise our profit margins because in order to take on this technology we will require outside resources to afford this, each resource will take a part of our profits until this resource is paid off and we are complete with repaying the external financing.

This technology purchase will require debt and will increase our liabilities. When looking at debt we have a few options, short-term debt which is usually paid off in a year or less or long-term debt, with maturities are over a year (Ross et al., 2019). Looking at the requirements for this type of purchase we will be primarily looking at long-term; however, we could use a combination of long-term and short-term to meet Straightline’s needs. Debt is generally regarded and less expensive than equity, especially when interest rates are lower. Equity for financing would usually be considered as the sale of common stock and a portion of our company to an investor. Due to this fact plus the tax benefits on interest payments I am recommending if Straightline decides to take on this project we utilize debt and not equity. The sale of part of our company through common stock would have an effect on other areas within the operations of Straightline, including a possible major shift from patient care to shareholder focused initiatives. We have discussed that this project will not be considered if it does not yield a positive net present value; however, there are repayment obligations that must be meet and the cost of financing is not guaranteed, it may exceed our original estimate and there are long term costs including salaries, upkeep, and maintenance.

Looking at inflation when considering bonds it is important to keep in mind that investors will require compensation when investing with us. This adjustment will impact our ability meet the level required for the increased profit margin. A believed higher interest rate in the future will affect the nominal interest rate requiring an inflation premium; if investors believe inflation will drop this would require a down-sloping term structure. Concerning both debt and equity the cost of doing business requires external funding, that total cost is not guaranteed so the more aware we are all with the decisions we make the better financial position Straightline Medical will be.


Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2019). Fundamentals of Corporate Finance (12th ed.). McGraw-Hill Education.

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