Given the following levels of permanent assets and temporary assets are for each month.

	January	February	March	April
Current Assets	20,000	30,000	20,000	20,000
Fixed Assets	50,000	50,000	50,000	50,000
Permanent Assets	70,000	70,000	70,000	70,000
Temporary Assets	0	10,000	0	0

A flexible policy would finance $80,000 with long-term debt and have excess cash of $10,000 to invest in marketable securities in January, March, and April. Overall, the interest expense on the extra $10,000 borrowed long-term will outweigh the interest received from the marketable securities.

A restrictive policy would finance $70,000 with long-term debt. In February, the firm would borrow $10,000 on a short-term basis to cover the cost of temporary assets in that month. The short-term loan would be repaid in March.

Which policy would be most effective for this firm- the flexible or restrictive? Post an answer, justifying it with what evidence you believe would be the most convincing.