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help please. Q# 4 ASF & Company is planning to introduces a new line of product that would involve increasing its current assets by 25%
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Q# 4 ASF & Company is planning to introduces a new line of product that would involve increasing its current assets by 25% its existing assets structures is (05 marks ) Current Assets 35 Fixed assets 55 Total assets 90 A/c payable 09 Accrued wages 06 Long term debts 9% 15 Equity 60 To fulfill the finance amount ASF & Company will have to be raised by borrowing on a bank credit line at 10% interest rate or borrowing on a 10 year note from an insurance company at 12% interest rate after the new line of product company operating expense will be 30 million which is 10% of total sales and Ebit is 20% of total sales with tax rate of 45% Required Considering three alternative for financing working capital requirement find out ROE which alternative would be bestStep by Step Solution
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