Help, i tried answering some but struggling!

Problem 15-4 Aggressive versus conservative seasonal funding strategy. Dynabase Tool has forecast its total funds requirements for the coming year as shown in the following table. MonthAmountMonthAmount January$2,000,000July$12,000,000 February2,000,000August14,000,000 March2,000,000September9,000,000 April4,000,000October5,000,000 May6,000,000November4,000,000 June9,000,000December3,000,000 a.Divide the firms monthly funds requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components.b.Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that, under the aggressive strategy, long-term funds finance permanent needs and short-term funds are used to finance seasonal needs.c.Assuming that short-term funds cost 5% annually and that the cost of long-term funds is 10% annually, use the averages found in part a to calculate the total cost of each of the strategies described in part b. Assume that the firm can earn 3% on any excess cash balances.d.Discuss the profitabilityrisk tradeoffs associated with the aggressive strategy and those associated with the conservative strategy. Solution a.Divide the firms monthly funds requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components. MonthTotal Funds RequirementsPermanent RequirementsSeasonal Requirements January$2,000,000$2,000,000$0Total72000000.0 February2,000,000$2,000,000$0average6000000.0 March2,000,000$2,000,000$0min2000000.0 April4,000,000$2,000,000$2,000,000max14000000.0 May6,000,000$2,000,000$4,000,000 June9,000,000$2,000,000$7,000,000 July$12,000,000$2,000,000$10,000,000 August14,000,000$2,000,000$12,000,000 September9,000,000$2,000,000$7,000,000 October5,000,000$2,000,000$3,000,000 November4,000,000$2,000,000$2,000,000 December3,000,000$2,000,000$1,000,000 Average monthly$2,000,000$4,000,000 b.Describe the amount of long-term and short-term financing used to meet the total funds requirement under (1) an aggressive funding strategy and (2) a conservative funding strategy. Assume that, under the aggressive strategy, long-term funds finance permanent needs and short-term funds are used to finance seasonal needs. Under an aggressive funding strategy, a larger proportion of short-term financing is used to meet the total funds requirement. This approach leverages short-term borrowing for both permanent and seasonal needs, capitalizing on lower borrowing costs and flexibility. Long-term financing is limited to cover primarily permanent needs. In contrast, a conservative funding strategy prioritizes stability and minimizes risk by relying more heavily on long-term financing, even for seasonal needs. The majority of funds are sourced from long-term options, ensuring a resilient capital structure. Short-term financing is utilized more selectively to address short-term, predictable seasonal requirements. The decision between these strategies hinges on factors like risk tolerance, market conditions, and the company's financial standing. c.Assuming that short-term funds cost 5% annually and that the cost of long-term funds is 10% annually, use the averages found in part a to calculate the total cost of each of the strategies described in part b. Assume that the firm can earn 3% on any excess cash balances. Aggressive strategy: Average monthly permanent$2,000,000 Average monthly seasonal$4,000,000 Cost of long-term funds Cost of short-term funds Cost of aggressive strategy Conservative strategy: Firm borrows peak monthly need Average amount of monthly surplus cash Interest on surplus cash Interest paid on borrowing Interest received on surplus cash Cost of conservative strategy d.Discuss the profitabilityrisk tradeoffs associated with the aggressive strategy and those associated with the conservative strategy. The aggressive strategy's pursuit of higher profitability through increased short-term financing entails elevated risk due to potential interest rate fluctuations, refinancing challenges, and liquidity issues. Conversely, the conservative strategy's emphasis on stable long-term financing minimizes risk exposure but may limit potential returns, as the higher financing costs associated with long-term sources can potentially lower overall profitability