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Hicks Health Clubs, Inc., has $10,000,000 in assets. If it goes with a low liquidity plan for the assets, it can earn a return of
Hicks Health Clubs, Inc., has $10,000,000 in assets. If it goes with a low liquidity plan for the assets, it can earn a return of 15 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 $10,000,000 will be 8 percent, and with a long-term financing plan, the financing costs on the $10,000,000 will be 9 percent. Compute the anticipated return after financing costs on the most aggressive asset-financing mix.
A. $100,000
B. $200,000
C. $700,000
D. $800,000
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