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Assume that Atlas Sporting Goods Inc. has $890,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return
Assume that Atlas Sporting Goods Inc. has $890,000 in assets. If it goes with a low-liquidity plan for the assets, it can earn a return of 13 percent, but with a high-liquidity plan the return will be 10 percent. If the firm goes with a short-term financing plan, the financing costs on the $890,000 will be 7 percent, and with a long-term financing plan the financing costs on the $890,000 will be 8 percent. a. Compute the anticipated return after financing costs with the most aggressive asset-financing mix. Anticipated return $ 53,400 b. Compute the anticipated return after financing costs with the most conservative asset-financing mix. Anticipated return $ 17,800 c. Compute the anticipated return after financing costs with the two moderate approaches to the asset-financing mix
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