Medical Inc is trying to develop an asset-financing plan. The firm has $3,200,000 in temporary current assets and $2,800,000 in permanent current assets. The company also has $10,400,000 in fixed assets.

Construct two alternative financing plans for the firm. One of the plans should be conservative, with 70 percent of assets financed by long-term sources and the rest financed by short-term sources. The other plan should be aggressive, with only 20 percent of assets financed by long-term sources and the remaining assets financed by short-term sources. The current interest rate is 12 percent on long-term funds and 5 percent on short-term financing. 

Compute the annual interest payments under each plan. (Show your work)

Answer rating: 100% (QA)

temporally current asset 320000000 permanent current asset 280000000 ... View the full answer