ZuoTi.Pro
Question

Assume that Hogan Surgical Instruments Co. has $2,400,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 17 percent, but with a high-liquidity plan, the return will be 13 percent. If the firm goes with a short-term financing plan, the financing costs on the $2,400,000 will be 9 percent, and with a long-term financing plan, the financing costs on the $2,400,000 will be 11 percent. a. Compute the anticipated return after financing costs with the most aggressive asset- financing mix. Anticipated return Compute the anticipated return after financing costs with the most conservative asset- financing mix. b. Anticipated retum c. Compute the anticipated return after financing costs with the two moderate approaches to the asset-financing mix. Anticipated Return Low liquidity High liquidity
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

✔ Recommended Answer
Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

Home nert Page Layout Formulas Data Review View dd-Ins Cut E AutoSum Wrap Text General aCopy B 1 프 . Ej-., Δ. : r_一 逻锂函Merge & Center. $, % , 弼,8 Paste Conditional Format CeInsert Delete Format Formatting, as Table w styles. ▼ ㆆ ▼ Sort &Find & 2 ClearFe Select Edting Format Painter Clipboard Font Alignment Number Styles Cells E36 23 24 (a) 25 26 27 28 (b) 29 30 31 32 (c) LOW LiQUIDITY RETURN SHORT TERM FINANCING COST ANTICIPATED RETURN 408000 2400000 *17% 225000 2500000*9% 183000 (C24-C25) HIGH LIQUIDITY RETURN LONG TERM FINANCING COST ANTICIPATED RETURN 312000 264000 2400000 *13% 2400000*1196 48000 (C28-C29) LOW LiQUIDITY RETURN LONG TERM FINANCING COST ANTICIPATED RETURN 408000 2400000 *17% 264000 2400000*1196 144000 (C32-C33) 34 35 36 37 38 39 40 41 4 Sheet1 Sheet2 z sCORE nsu pv fcash HIGH LIQUIDITY RETURN SHORT TERM FINANCING COST ANTICIPATED RETURN 312000 225000 2400000 *13% 2500000*9% 87000 (C36-C37) LINE OF CREDIT miler CARD BANKER ACCEPTANC FACTOR SI DISC FOCAL 05:19 31-01-2019

4 0
Add a comment
Know the answer?
Add Answer to:
Assume that Hogan Surgical Instruments Co. has $2,400,000 in assets. If it goes with a low-liquidity...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Similar Homework Help Questions

  • Assume that Atlas Sporting Goods Inc. has $880,000 in assets. If it goes with a low-liquidity...

    Assume that Atlas Sporting Goods Inc. has $880,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 12 percent, but with a high-liquidity plan the return will be 9 percent. If the firm goes with a short-term financing plan, the financing costs on the $880,000 will be 6 percent, and with a long-term financing plan the financing costs on the $880,000 will be 7 percent. a. Compute the anticipated return after...

  • Assume that Atlas Sporting Goods Inc. has $880,000 in assets. If it goes with a low-liquidity...

    Assume that Atlas Sporting Goods Inc. has $880,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 12 percent, but with a high-liquidity plan the return will be 9 percent. If the firm goes with a short-term financing plan, the financing costs on the $880,000 will be 6 percent, and with a long-term financing plan, the financing costs on the $880,000 will be 7 percent. a. Compute the anticipated return after...

  • Anticipated Return & Earnings per share

    Problem 6-11 Assume that Atlas Sporting Goods Inc. has $850,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 16 percent, but with a high-liquidity plan, the return will be 13 percent. If the firm goes with a short-term financing plan, the financing costs on the $850,000 will be 10 percent, and with a long-term financing plan, the financing costs on the $850,000 will be 12 percent. a. Compute the anticipated return after financing...

  • Guardian Inc. is trying to develop an asset-financing plan. The firm has $330,000 in temporary current...

    Guardian Inc. is trying to develop an asset-financing plan. The firm has $330,000 in temporary current assets and $230,000 in permanent current assets. Guardian also has $430,000 in fixed assets. Assume a tax rate of 40 percent. a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 80 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest...

  • Guardian Inc. Is trying to develop an asset-financing plan. The firm has $370,000 in temporary current...

    Guardian Inc. Is trying to develop an asset-financing plan. The firm has $370,000 in temporary current assets and $270,000 In pemanent current assets. Guardian also has $470,000 in fixed assets. Assume a tax rate of 30 percent. a. Construct two alternative financing plans for Guardlan. One of the plans should be conservative, with 70 percent of assets financed by long-term sources, and the other should be aggresslve, with only 56.25 percent of assets financed by long-term sources. The current interest...

  • Guardian Inc. is trying to develop an asset-financing plan. The firm has $500,000 in temporary current...

    Guardian Inc. is trying to develop an asset-financing plan. The firm has $500,000 in temporary current assets and $400,000 in permanent current assets. Guardian also has $600,000 in fixed assets. Assume a tax rate of 30 percent. a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 80 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest...

  • Guardian Inc. is trying to develop an asset-financing plan. The firm has $330,000 in temporary current...

    Guardian Inc. is trying to develop an asset-financing plan. The firm has $330,000 in temporary current assets and $230,000 in permanent current assets. Guardian also has $430,000 in fixed assets. Assume a tax rate of 40 percent. a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 80 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest...

  • Guardian Inc. is trying to develop an asset-financing plan. The firm has $400,000 in temporary current...

    Guardian Inc. is trying to develop an asset-financing plan. The firm has $400,000 in temporary current assets and $300,000 in permanent current assets. Guardian also has $500.000 in fixed assets. Assume a tax rate of 40 percent a. Construct two alternative financing plans for by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed current interest rate is 15 percent on long-term funds and 10 percent on short-term financing. Comput under each plan. Guardian....

  • Guardian Inc us trying to develop an asset-financing plan. The firm has $400,000 tenporary current assets...

    Guardian Inc us trying to develop an asset-financing plan. The firm has $400,000 tenporary current assets and 300,000 in permanent current assets. Guardian also has $500,000 in fixed assets. Assume a tax rate od 40 percent. a. Constrct two alternative financing plans for Guardian. 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 56.25 percent of assets financed financed bt lond-term sources. The current interest...

  • Sherlock Homes, a manufacturer of low-cost mobile housing, has $4,500,000 in assets. Temporary current assets Permanent...

    Sherlock Homes, a manufacturer of low-cost mobile housing, has $4,500,000 in assets. Temporary current assets Permanent current assets Capital assets $1,000,000 1,500,000 2,000,000 Total assets $4,500,000 Short-term rates are 8 percent. Long-term rates are 13 percent. (Note that long-term rates imply a return to any equity). Earnings before interest and taxes are $960,000. The tax rate is 40 percent. If long-term financing is perfectly matched (hedged) with long-term asset needs, and the same is true of short-term financing, what will...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
Active Questions
ADVERTISEMENT