Pulaski Inc. is trying to develop an asset financing plan. Assume a $40\%$ tax rate for the firm. The firm has the following assets:

Temporary current assets $$400,000$

Permanent current assets $$300,000$

Fixed assets $$500,000$

a$.$ Construct two alternativ financing plans for the firm. One of the plans should be conservative, with $75$ percent of assets financed by long$-$term sources, and the other should be aggressive, with only $56\mathrm{.}25$ percent of assets financed on long$-$term funds and $10\%$ on short$-$term financing.

b$.$ Given that the firm$$s earnings before interest and taxes are $$200,000,$ calculate earnings after taxes for each of your alternatives.

c$.$ What would happen if the short$-$ and long$-$term rates were reversed?

d$.$ What do these results tell you aobut the impact of financing assets?