Question: Christensen & Assoc, is developing an asset financing plan. Christensen has $500 000 in current assets, of which 15% are permanent, and $700,000 in fixed
Christensen & Assoc, is developing an asset financing plan. Christensen has $500 000 in current assets, of which 15% are permanent, and $700,000 in fixed assets. The current long-term rate is 11%, and the current short-term rate is 8.5%. Christensen's tax rate is 40%. Construct two financing plans-one conservative, with 80% of assets financed by long-term sources, and the other aggressive, with only 60% of assets financed by long-term sources. If Christensen's earnings before interest and taxes are $325,000, calculate net income under each alternative. What are some of the risks associated with each plan
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