(solution) The balancing item in the Dynamic long-term planning model is borrowing

(solution) The balancing item in the Dynamic long-term planning model is borrowing

1. The balancing item in the Dynamic long-term planning model is borrowing. What is meant by balancing item? How would the model change if dividends were made the balancing item instead? In that case how would you suggest that planned borrowing be determined?2. Construct a new model for Dynamic Mattress based on your answer to . Does your model generate a feasible financial plan for 2010? ( Hint: If it doesn’t, you may have to allow the firm to issue stock.)