Amile Corporation has a total of $1,000,000 in current assets. 15% of current assets are permanent current assets. The company has $700,000 in fixed assets. The current short-term rate is 6.5% while the current long-term rate is 9%. The company has a tax rate of 30%.

The company is deciding between two financing plans. The conservative plan calls for 40% of temporary current assets to be financed by short-term sources with the remainder of assets financed by long-term sources. The more aggressive plan calls for all temporary current assets and permanent current assets to be financed by short-term sources and all fixed assets to be financed by long-term sources.

If Amile Corporation's EBIT is $525,000, calculate net income under each alternative. Then determine which of the following answer choices is true.

Select one:

a. Total interest expense is greater under the more aggressive plan.

b. Net income under the conservative plan is $245,000 and $239,000 under the more aggressive plan.

c. Short-term interest expense is higher under the more conservative plan.

d. Net income under the conservative plan is $379,000 and $385,000 under the more aggressive plan.

e. Net income under the conservative plan is $266,350 and $277,900 under the more aggressive plan.