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.