Aggressive versus conservative seasonal funding strategyDynabase Tool has forecast its total funds requirements for the coming year as shown in the following table.

MonthAmountMonthAmountJanuary$2,000,000July$12,000,000February2,000,000August14,000,000March2,000,000September9,000,000April4,000,000October5,000,000May6,000,000November4,000,000June9,000,000December3,000,000

1. Divide the firm's monthly funds requirement into (1) a permanent component and (2) a seasonal component, and find the monthly average for each of these components.
2. 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.
3. Assuming that short-term funds cost 5% annually and that the cost of long-term funds is 10% annually, use the averages found in partato calculate the total cost of each of the strategies described in partb.Assume that the firm can earn 3% on any excess cash balances.
4. Discuss the profitability-risk tradeoffs associated with the aggressive strategy and those associated with the conservative strategy.