Question
1. The total resources of BROWN Trading amount to PHP 6,000,000 which is broken down as follows: Temporary current assets 800,000 Permanent current assets 1,600,000
1. The total resources of BROWN Trading amount to PHP 6,000,000 which is broken down as follows: Temporary current assets 800,000 Permanent current assets 1,600,000 Fixed assets 3,600,000 The interest rate on current short-term debt is 6% while that of the long-term debt is 12%. The applicable tax rate of the business is 30%. The earning before interest and taxes amount to PHP 1,800,000. Prepare the following: a. Aggressive financing policy where 40% of the total assets are financed by long-term debts. b. Conservative financing policy where 85% of the total assets are financed by long-term debts. c. Compute the return on equity under two financing plans.
1. The total resources of BROWN Trading amount to $8,000,000 which is broken down as follows: Temporary current assets 800.000 Permanent current assets 1,600,000 3,600,000 The interest rate on current short-term debt is 6% while that of the long-term debt is 12%. The applicable tax rate of the business is 30%. The earning before interest and taxes amount to P1,800,000. Fixed assets Prepare the following: a. Aggressive financing policy where 40% of the total assets are financed by long-term debts. b. Conservative financing policy where 85% of the total assets are financed by long-term debts. C. Compute the return on equity under two financing plans. 1. The total resources of BROWN Trading amount to $8,000,000 which is broken down as follows: Temporary current assets 800.000 Permanent current assets 1,600,000 3,600,000 The interest rate on current short-term debt is 6% while that of the long-term debt is 12%. The applicable tax rate of the business is 30%. The earning before interest and taxes amount to P1,800,000. Fixed assets Prepare the following: a. Aggressive financing policy where 40% of the total assets are financed by long-term debts. b. Conservative financing policy where 85% of the total assets are financed by long-term debts. C. Compute the return on equity under two financing plansStep by Step Solution
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